Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files. Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained,
to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in
Rule 12b-2 of the Exchange Act)

Large accelerated filer þ

Accelerated filer ¨

Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ¨ No þ

The aggregate market value of the Class A Common Stock ($.01 par value) held by non-affiliates of the registrant totaled $1,010.6 million (based on
the average price of the Companys Class A Common Stock on the New York Stock Exchange on June 30, 2012). All of the registrants Class B Common Stock ($.01 par value) is held by an affiliate.

As of February 15, 2013, there were 8,758,696 shares outstanding of the Companys Class A Common Stock ($.01 par value) and 4,107,355
shares outstanding of the Companys Class B Common Stock ($.01 par value).

DOCUMENTS INCORPORATED BY REFERENCE

Certain parts of the registrants definitive Proxy Statement for its 2013 Annual Meeting to be held on May 29, 2013 are
incorporated by reference into Part III of this report.

The Boston Beer Company, Inc.
(Boston Beer or the Company) is the largest craft brewer in the United States. In fiscal 2012, Boston Beer sold approximately 2.7 million barrels of its proprietary products (core brands) and brewed or
packaged approximately 19,000 barrels under contract (non-core brands) for third parties.

During 2012, the
Company sold over fifty beers under the Samuel Adams® or the Sam Adams® brand names, ten flavored malt beverages under the Twisted Tea® brand name, five hard cider beverages under the Angry Orchard ® brand name, and five beers under two brand names under its Alchemy & Science subsidiary. Boston Beer produces malt beverages and hard cider at Company-owned
breweries and under contract arrangements at other brewery locations. The Company-owned breweries are located in Boston, Massachusetts (the Boston Brewery), Cincinnati, Ohio (the Cincinnati Brewery), Breinigsville,
Pennsylvania (the Pennsylvania Brewery) and Los Angeles, California, (the Angel City Brewery).

The Companys
principal executive offices are located at One Design Center Place, Suite 850, Boston, Massachusetts 02210, and its telephone number is (617) 368-5000.

Beer Industry Background

Before Prohibition, the United States beer industry consisted of
hundreds of small breweries that brewed full-flavored beers. After the end of Prohibition, most domestic brewers shifted production to less flavorful, lighter beers, which use lower-cost ingredients, and can be mass-produced to take advantage of
economies of scale in production. This shift towards mass-produced beers coincided with consolidation in the beer industry. Today, two major brewers, Anheuser-Busch InBev (AB InBev) and MillerCoors LLC (MillerCoors), comprise
over 90% of all United States domestic beer production, excluding imports.

The Companys beers are primarily
positioned in the Better Beer category of the beer industry, which includes craft (small, independent and traditional) brewers, domestic specialty beers and most imports. Better Beers are determined by higher price, quality, image and taste, as
compared with regular domestic beers. Samuel Adams® is one of the largest brands in the Better Beer category of
the United States brewing industry. In addition, AB InBev and MillerCoors have entered the Better Beer category, either by developing their own domestic specialty beers, acquiring, in whole or part, existing craft brewers, or by importing and
distributing foreign brewers brands. The Company estimates that in 2012 the craft beer category grew approximately 11% to 13%, and the Better Beer category was up approximately 6% to 7%, while the total beer category was up approximately
1%.The Company believes that the Better Beer category is approximately 22% of United States beer consumption by volume.

The domestic
beer industry, excluding Better Beers, has experienced a decline in shipments over the last ten years. The Company believes that this decline is due to declining alcohol consumption per person in the population, drinkers trading up to drink high
quality, more flavorful beers and increased competition from wine and spirits companies. During the past thirty years, domestic light beers, which are beers with fewer calories than the brewers traditional beers, have experienced significant
growth within the industry and now have a higher market share than traditional beers.

The Companys Twisted
Tea product line competes primarily within the flavored malt beverage (FMB) category of the beer industry. FMBs, such as Twisted Tea, Smirnoff Ice®, Mikes Hard Lemonade®,
and Bud Light Lime®Lime-a-Rita are flavored malt beverages that are typically priced competitively with Better
Beers. The Company believes that the FMB category comprises approximately 2% of United States beer consumption. The Company believes that the volume comprising the FMB category increased 9% in 2012 and that the increased volume in 2012 was due to
the launch of Bud Light Lime® Lime-a-Rita which made up most of the categorys growth.

The Companys Angry Orchard product line competes within the hard cider category. Hard ciders
are typically priced competitively with Better Beers and may compete with beer, wine, spirits, or FMBs for drinkers. Some of these competitors include C&C Group PLC under the brand names Woodchuck, Magners and
Hornsbys; Heineken under the brand name Strongbow; MillerCoors under the brand name Crispin Cider and ABI InBev under Michelob Ultra Cider. The Company believes that the hard cider category
comprises less than 0.5% of United States beer consumption and that the volume comprising the hard cider category increased 60% to 70% in 2012.

Narrative Description of Business

The
Companys business goal is to become the leading brewer in the Better Beer category by creating and offering high quality full-flavored beers. With the support of a large, well-trained sales organization and world-class brewers, the Company
strives to achieve this goal by brewing great products, and increasing brand availability and awareness through advertising, point-of-sale, promotional programs and drinker education.

Products Marketed

The Companys product strategy is to
create and offer a world-class variety of traditional and innovative beers and other alcoholic beverages with a focus on promoting the Samuel Adams® product line. In most markets, the Company focuses its advertising and promotional dollars on Samuel Adams Boston Lager® and Samuel Adams® Seasonal Beers.

The Samuel Adams® Brewmasters Collection is an important part of the Companys portfolio and heritage, but receives limited
promotional support. The Small Batch Collection, Barrel Room Collection and Limited Edition Beers are produced in limited quantities and are sold at higher prices than the Companys other products. The Twisted Tea brand family has grown
each year since the product was first introduced and has established a drinker following in several markets. The Angry Orchard brand family was launched in the second half of 2011 in several markets. In 2012, the Company completed its
national distribution for both Twisted Tea and Angry Orchard brand families.

The following is a list of significant continuing
styles as of December 29, 2012:

Certain products may be produced at select times during the year solely for inclusion
in the Companys variety packs. During 2012, Samuel Adams Mighty Oak Ale, was brewed and included in the Samuel Adams Brewers Choice Variety Mix Pack, Samuel Adams Belgian Session and Samuel Adams East West Kolsh
were brewed and included in the Summer Styles variety pack, Samuel Adams Dunkelweizen and Samuel Adams Hazel Brown Ale were brewed and included in the Harvest Collection variety pack and Samuel Adams Chocolate Bock, Samuel
Adams Old Fezziwig® Ale and Samuel Adams Holiday Porter were brewed and included in the Samuel
Adams Winter Classics variety pack.

Also during 2012, the Company released a variety of specialty draft beers brewed in limited quantities for its Single
Batch Series, festivals and Beer Week celebrations.

In 2012, the Company completed its national rollout for both the Twisted Tea and
Angry Orchard brand families. The company believes the gross profits from these brands have helped the Company increase its investment in Samuel Adams and have built a stronger Boston Beer brand portfolio with wholesalers and retailers. The
Company will continue to look for complementary opportunities to leverage its capabilities, provided that they do not distract from its primary focus on its Samuel Adams brand.

The Company continually evaluates the performance of its various beers, flavored malt beverages and hard cider styles and the rationalization of its product line, as a whole. Periodically, the Company
discontinues certain styles, Samuel Adams Pale Ale and HardCore cider were discontinued during 2012. Certain styles discontinued in previous years may be produced for the Companys variety packs or reintroduced.

Product Innovations

The Company is committed to maintaining its position as a leading innovator in the Better Beer category by developing new products that allow the Samuel Adams beer drinker to try new styles of malt
beverages. To that end, the Company continually test brews different beers and occasionally sells them under various brand labels for evaluation of drinker interest.The Company also promotes the annual LongShot American
Homebrew Contest® in which Samuel Adams beer drinkers and employees of the Company submit homebrews for
inclusion in the LongShot® six-pack in the following year. During the year, the Company sold over fifty
Samuel Adams beers commercially and brewed many more test brews. The Companys Boston Brewery spends most of its time ideating, testing and developing beers and ciders for the Companys potential future commercial development.

In late 2011, the Company formed a subsidiary, A&S Brewing Collaborative LLC, d/b/a Alchemy & Science, headed by Alan Newman,
founder of Magic Hat Brewing, as a craft brew incubator headquartered in Burlington, Vermont. The mission of Alchemy & Science is to find new opportunities in craft brewing which may be geographical or stylistic and some may be with
existing breweries or brewpubs. Alchemy & Science will be looking for unique brewing techniques and ingredients, as well as hunting for ancient or new recipes and beer styles to develop and introduce to beer lovers, and will have the
brewing talents and broad resources of the Company as it looks for opportunities around the country. During the first quarter of 2012, Alchemy and Science purchased the assets of Southern California Brewing Company, Inc., a Los Angeles based craft
brewer doing business as Angel City Brewing Company. During 2012, Angel City Brewery launched two new beers, Angeleno IPA and Eureka Wit on draft in the Los Angeles market, and the Angel City Brewery and Beer Hall in downtown Los Angeles opened to
the public in the first quarter of 2013. Also during 2012, Alchemy & Science formed

House of Shandy (later renamed Traveler Beer Co.) which rolled out in test markets with its Curious Traveler and Tenacious Traveler shandy style beers. The Traveler Beer Co. is likely to roll-out
more markets in 2013. These projects have had minimal sales to date.

Sales, Distribution and Marketing

The Company sells its products to a network of approximately 340 wholesale distributors. These distributors, in turn, sell the products to retailers, such
as pubs, restaurants, grocery, convenience stores, package stores, stadiums and other retail outlets, where the products are sold to drinkers. With few exceptions, the Companys products are not the primary brands in distributors
portfolios. Thus, the Company, in addition to competing with other malt beverages for a share of the drinkers business, competes with other brewers for a share of the distributors attention, time and selling efforts.

The Company sells its products predominantly in the United States, but also has markets in Canada, Europe, Israel, the Caribbean, the Pacific Rim and
Mexico.During 2012, the Companys largest customer accounted for approximately 6% of the Companys net sales. The top three customers accounted for approximately 12%, collectively. In some states, the terms of the Companys
contracts with its distributors may be affected by laws that restrict the enforcement of some contract terms, especially those related to the Companys right to terminate the services of its distributors.

Most core brands are shipped within days of completion and there has not been any significant product order backlog. The Company has historically
received most of its orders in the first week of a month for products to be shipped the following month and would carry three to five weeks of packaged inventory (usually at ambient temperatures) and three to four weeks of draft inventory.

In an effort to reduce both the time and temperature the Companys beers experience at wholesaler warehouses before reaching the
market, the Company introduced its Freshest Beer Program with domestic wholesalers in several markets in late 2010. The goal of the Freshest Beer Program is to provide better on-time service, forecasting, production planning and cooperation with the
wholesalers, while substantially reducing inventory levels at the wholesaler. At December 29, 2012, the Company had 89 wholesalers participating in the program at various stages of inventory reduction, which constitutes over 59% of its volume.
The Company believes that by the end of 2013 between 65% and 75% of its volume will be in the Freshest Beer Program. The Company successfully reduced the inventories of participating wholesalers by approximately two weeks, resulting in fresher beer
being delivered to retail. The Freshest Beer Program has resulted in lower shipments of approximately 50,000, 133,000 and 241,000 case equivalents in 2010, 2011 and 2012, respectively, when measured at the end of the year, which historically has
been the low point of the year for wholesaler inventories. The wholesaler ordering process has changed significantly for wholesalers that participate in the Freshest Beer Program and has resulted in a shorter period between order placement and
shipment. There are various risks associated with the Freshest Beer Program that are discussed in Risk Factors below.

During 2012,
Boston Beer had a sales force of approximately 330 people, which the Company believes is one of the largest in the domestic beer industry. The Companys sales organization is designed to develop and strengthen relations at each level of the
three-tier distribution system by providing educational and promotional programs encompassing distributors, retailers and drinkers. The Companys sales force has a high level of product knowledge and is trained in the details of the brewing and
selling processes. Sales representatives typically carry hops, barley and other samples to educate wholesale and retail buyers about the quality and taste of the Companys beers. The Company has developed strong relationships with its
distributors and retailers, many of which have benefited from the Companys premium pricing strategy and growth.

The Company also
engages in media campaigns  primarily television, radio, billboards and print. These media efforts are complemented by participation in sponsorships of cultural and community events, local beer festivals, industry-related trade shows and
promotional events at local establishments, to the extent permitted under local laws and regulations. The Company uses a wide array of point-of-sale items (banners, neons, umbrellas, glassware, display pieces, signs and menu stands) designed to
stimulate impulse sales and continued awareness.

The Company launched a philanthropic program in 2008 called Samuel Adams Brewing the
American Dream®. Partnering with ACCION USA, the nations largest non-profit micro-lender, the program is
designed to provide low to moderate income small business owners in the food, beverage and hospitality industries with small loans and support through training and speed coaching programs. Since its inception, the Samuel Adams Brewing
the American Dream fund at ACCION has made loans of over $1.9 million to over 200 small business owners and craft brewers.

Ingredients and Packaging

The
Company has been successful to date in obtaining sufficient quantities of the ingredients used in the production of its beers. These ingredients include:

Malt. The two-row varieties of barley used in the Companys malt are mainly grown in the United States and Canada. The 2012 barley crop in the United
States and Canada was consistent with ten-year averages overall in terms of quality and quantity. The 2011, barley crop in the United States and Canada was slightly below ten-year averages overall in terms of quality and quantity. The 2012 and 2011
barley crop prices were significantly above the comparable averages. The Company purchased most of the malt used in the production of its beer from two major suppliers during 2012. The Company currently has a multi-year contract with one supplier,
but also believes that there are other malt vendors available that are capable of supplying its needs.

Hops. The Company uses Noble hops varieties for most of its Samuel Adams® beers. Noble hops are produced in several specific growing areas recognized for growing hops with superior taste and
aroma properties and include Hallertau-Hallertauer, Tettnang-Tettnanger, Hersbruck-Hersbrucker and Spalt-Spalter from Germany and Saaz-Saazer from the Czech Republic. Noble hops are rare and more expensive than most other varieties of hops.
Traditional English hops, namely, East Kent Goldings and English Fuggles, are used in many of the Companys ales and United States hops, namely Ahtanum, Cascade and Simcoe are used in certain of the Companys ales and lagers. The Company enters
into purchase commitments with six hops dealers, based on the Companys projected future volumes and brewing needs. The dealers then contract with farmers to meet the Companys needs. The contracts with the hop dealers are denominated in
Euros for the German and Czech hops, in Pounds Sterling for the English hops and in US Dollars for United States hops. The Company does not currently hedge its forward currency commitments. The crops harvested in 2012 were consistent with historical
averages in terms of both quality and quantity for most hop varieties and the Company expects to realize near full delivery on hops that were contracted for. While under-delivery occurred with some niche varieties, this under-delivery was not
significant and is not expected to impact the production of the Companys beers. The Company attempts to maintain approximately two years supply of essential hop varieties on-hand in order to limit the risk of an unexpected reduction in
supply. The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site.

Yeast. The Company maintains a supply of proprietary strains of yeast used in its breweries. Since these
yeasts would be impossible to duplicate if destroyed, the Company maintains secure supplies in several locations and the strains are stored and protected at an outside laboratory.

Apples. The Company uses special varieties of apples in its ciders that it believes are important for the ciders flavor profile. These apples are purchased from
European suppliers and include bittersweet apples from France and culinary apples from Italy. There is limited availability of these apples and many outside factors, including weather conditions, farmers rotating from apples to other crops,
government regulations and legislation affecting agriculture, could affect both price and supply. During 2012, the Company experienced shortages of apples that impacted the timing of shipments of ciders to wholesalers. In late 2012, the Company
entered into purchase commitments with apple suppliers, designed to cover its 2013 needs. The Company is evaluating entering into multiple year contracts for apples with various suppliers.

Other Ingredients. The Company maintains competitive sources for most
of the other ingredients used in its specialty malt-based and cider products.

Packaging Materials. The
Company maintains competitive sources for the supply of certain packaging materials, such as shipping cases, six-pack carriers and crowns. The Company enters into limited-term supply agreements with certain vendors in order to receive preferential
pricing. Currently, glass and labels are each supplied by a single source, although the Company believes that alternative suppliers are available.

The Company initiates bottle deposits in some states and reuses glass bottles that are returned pursuant to certain state bottle recycling laws. The Company derives some economic benefit from its reuse of
returned glass bottles. The cost associated with reusing the glass varies, based on the costs of collection, sorting and handling, including arrangements with retailers, wholesalers and dealers in recycled products. There is no guarantee that the
current economics relating to the use of returned glass will continue or that the Company will continue to reuse returnable bottles.

Quality Assurance

As of
December 29, 2012, the Company employed over fifteen brewmasters to monitor the Companys brewing operations and control the production of its beers and ciders. Extensive tests, tastings and evaluations are typically required to ensure
that each batch of Samuel Adams beer, Twisted Tea flavored malt beverage and Angry Orchard hard cider conforms to the Companys standards. The Company has on-site quality control labs at each brewery.

With the exception of certain specialty products, the Company includes a clearly legible freshness code on every bottle
and keg of its Samuel Adams® products in order to ensure that its customers enjoy only the freshest beer. Boston
Beer was the first American brewer to use this practice.

Brewing Strategy

During 2012, the Company brewed and packaged approximately 90% of its core brand volume at Company-owned breweries. The Company had capital investments in
2012 of approximately $67 million to invest in efficiency projects, support the increasing complexity of its portfolio and the Freshest Beer Program, and to expand the quality, capacity and capabilities of its breweries to meet anticipated future
growth. The Company expects to invest between $70 million and $85 million in 2013, after which capital investment should return to a level of between $30 million and $50 million, including capacity expansion initiatives to accommodate expected
growth; however, the actual amount spent may well be different from these estimates. Under this capital plan, along with expanding the Companys use of production arrangements with third parties, the Company believes it should be able to
support the projected growth in 2013. The Company continues to evaluate capacity optimization at its breweries and the potential significant capital required for expansion of absolute capacity at its existing breweries.

The Company-owned breweries are located in Breinigsville, Pennsylvania (Pennsylvania Brewery), Cincinnati, Ohio Cincinnati
Brewery), Boston, Massachusetts (Boston Brewery) and Los Angeles, California, (the Angel City Brewery). The Pennsylvania and Cincinnati Breweries produce the full range of the Companys core brands and produce most
of the Companys shipment volume. The Pennsylvania Brewery is the Companys largest brewery and the Cincinnati Brewery is the primary brewery for the production of most of the Companys specialty and lower volume products. The Boston
Brewerys production is mainly for developing new types of innovative and traditional beers and brewing and packaging beers in the Samuel Adams Barrel Room Collection and certain keg beers for the local market. The Angel City Brewery
production currently supports draft accounts in the Los Angeles market and on-premise consumption at its beer hall. Product development entails researching market needs and competitive products, sample brewing and market taste testing. Most of the
Companys Samuel Adams beers are produced at the Boston Brewery in the course of each year.

The Company currently has a brewing and packaging services agreement with City Brewing Company, LLC, to
produce its products at facilities in Latrobe, Pennsylvania and La Crosse, Wisconsin and an agreement with Pleasant Valley Wine Company to brew and/or package at facilities in Hammondsport, New York. The Company carefully selects breweries and
packaging facilities owned by others with (i) the capability of utilizing traditional brewing methods and (ii) first-rate quality control capabilities throughout brewing, fermentation, finishing and packaging. Under its brewing and
packaging arrangements with third parties, the Company is charged a service fee based on units produced at each of the facilities and bears the costs of raw materials, excise taxes and deposits for pallets and kegs and specialized equipment required
to brew and package the Companys beers.

The Company believes that it has secured sufficient alternatives in the event that production
at any of its brewing locations is interrupted, although as volumes at the Pennsylvania Brewery increase, interruptions there could become more problematic. In addition, the Company may not be able to maintain its current economics if interruptions
were to occur and could face significant delays in starting up such replacement brewing locations. Potential interruptions at breweries include labor issues, governmental actions, quality issues, contractual disputes, machinery failures or
operational shut downs. Also, as the brewing industry has consolidated, the financial stability of the breweries owned by others where the Company could brew some of its beers, if necessary, and their ability or willingness to meet the
Companys needs, has become a more significant concern. The Company continues to work with all of its breweries to attempt to minimize any potential disruptions.

Competition

The Better Beer category within the United States beer market is highly
competitive due to the large number of craft brewers and imported beers with similar pricing and target drinkers. The Company anticipates competition and innovation among domestic craft brewers to remain strong, as craft brewers experienced their
eighth successive year of growth in 2012 and there were many new startups. The Company estimates there are approximately 3,600 breweries in operation or in the planning stages up from approximately 420 operating craft breweries in 2006. Also,
existing craft breweries are building more capacity, expanding geographically, adding more SKUs and styles, as distributors and retailers are promoting and making more shelf space available for more craft beer brands.

Imported beers, such as Corona® and Heineken®, continue to
compete aggressively in the United States and have gained market share over the last ten years. These import competitors may have substantially greater financial resources, marketing strength and distribution networks than the Company. The two
largest brewers in the United States, MillerCoors and AB InBev, have entered the Better Beer category with domestic specialty beers, either by developing their own beers, acquiring, in whole or part, existing craft brewers, importing and
distributing foreign brewers brands or increasing their development and marketing efforts on their own domestic specialty beers that might compete in the Better Beer category.

In June 2012, AB InBev agreed to purchase an additional 50% interest in the Mexican brewer Grupo Modelo, owner of Corona and other imported brands for $20.1 billion, which if completed would result in AB
InBevs 100% ownership of Grupo Modelo. This acquisition is currently the subject of a complaint filed by the U.S. Department of Justice Anti-Trust Division.

The Companys products also compete with other alcoholic beverages for drinker attention and consumption. In recent years, wine and spirits have been competing more directly with beers. The Company
monitors such activity and attempts to develop strategies which benefit from the drinkers interest in trading up in order to position its beers competitively with wine and spirits.

The Company competes with other beer and alcoholic beverage companies within a three-tier distribution system. The Company competes for a share of the distributors attention, time and selling
efforts. In retail establishments, the Company competes for shelf, cold box and tap space. From a drinker perspective, competition exists for brand acceptance and loyalty. The principal factors of competition in the Better Beer segment of the beer
industry include product quality and taste, brand advertising and imagery, trade and drinker promotions, pricing, packaging and the development of new products.

The Company distributes its products through independent distributors who may also distribute
competitors products. Certain brewers have contracts with their distributors that impose requirements on distributors that are intended to maximize the wholesalers attention, time and selling efforts on that brewers products. These
contracts generally result in increased competition among brewers as the contracts may affect the manner in which a distributor allocates selling effort and investment to the brands included in its portfolio. The Company closely monitors these and
other trends in its distributor network and works to develop programs and tactics intended to best position its products in the market.

The
Company has certain competitive advantages over the regional craft brewers, including a long history of awards for product quality, greater available resources and the ability to distribute and promote its products on a more cost-effective basis.
Additionally, the Company believes it has competitive advantages over imported beers, including lower transportation costs, higher product quality, a lack of import charges and superior product freshness.

The Companys Twisted Tea products compete within the FMB category of the beer industry. This category is highly competitive due to, among
other factors, the presence of large spirits companies, the advertising of malt-based spirits brands in channels not available to the parent brands and a fast pace of product innovation.

The Companys Angry Orchard ciders compete within the hard cider category. This category is small but growing and highly competitive and includes large international competitors and many small
regional and local hard cider companies.

Regulation and Taxation

The alcoholic beverage industry is regulated by federal, state and local governments. These regulations govern the production and distribution of alcoholic beverages, including permitting, licensing,
marketing and advertising, distributor relationships, sales, environmental, and occupational health and safety issues. To operate its breweries, the Company must obtain and maintain numerous permits, licenses and approvals from various governmental
agencies, including the Alcohol and Tobacco Tax and Trade Bureau, the Food and Drug Administration, state alcohol regulatory agencies and state and federal environmental agencies.

Governmental entities may levy various taxes, license fees and other similar charges and may require bonds to ensure compliance with applicable laws and regulations. The federal excise tax on malt
beverages is $18 per barrel, on hard cider (with alcohol by volume of 7% or less) is $0.226 per gallon and on artificially carbonated wine (hard cider with alcohol by volume greater than 7%) is $3.30 per gallon. States levy excise tax at varying
rates based on the type of beverage and alcohol content. Failure by the Company to comply with applicable federal, state or local laws and regulations could result in higher taxes, penalties, fees and suspension or revocation of permits, licenses or
approvals. While there can be no assurance that any such regulatory action would not have a material adverse effect upon the Company or its operating results, the Company is not aware of any infraction affecting any of its licenses or permits that
would materially impact its ability to continue its current operations.

Trademarks

The Company has obtained United States Trademark Registrations for over 90 trademarks, including Samuel Adams®, the design logo of Samuel Adams®, Samuel Adams Boston Lager®,
Samuel Adams Utopias®, Twisted Tea®, Angry Orchard ® and Samuel
Adams Brewing the American Dream ®. It also has a number of common law marks, including Infinium. The
Samuel Adams trademark, the Samuel Adams Boston Lager trademark, the design logo of Samuel Adams, the Twisted Tea trademark and other Company trademarks are also registered or registration is pending in various foreign
countries. The Company regards its Samuel Adams family of trademarks and other trademarks as having substantial value and as being an important factor in the marketing of

its products. The Company is not aware of any trademark infringements that could materially affect its current business or any prior claim to the trademarks that would prevent the Company from
using such trademarks in its business. The Companys policy is to pursue registration of its marks whenever appropriate and to vigorously oppose any infringements of its marks.

The
Companys operations are subject to a variety of extensive and changing federal, state and local environmental and occupational health and safety laws, regulations and ordinances that govern activities or operations that may have adverse
effects on human health or the environment. Environmental laws, regulations or ordinances may impose liability for the cost of remediation, and for certain damages resulting from, sites of past releases of hazardous materials. The Company believes
that it currently conducts, and in the past has conducted, its activities and operations in substantial compliance with applicable environmental laws, and believes that any costs arising from existing environmental laws will not have a material
adverse effect on the Companys financial condition or results of operations.

The Company has adopted various policies and procedures
intended to ensure that its facilities meet occupational health and safety requirements. The Company believes that it currently is in compliance with applicable requirements and will continue to endeavor to remain in compliance. There can be no
assurances, however, that new and more restrictive requirements might not be adopted, compliance with which might have a material, adverse financial effect on the Company and its operating results, or that such policies and procedures will be
consistently followed and be sufficient to prevent serious accidents.

As part of its efforts to be environmentally friendly, the Company has
reused its glass bottles returned from certain states that have bottle deposit bills. The Company believes that it benefits economically from washing and reusing these bottles, which result in a lower cost than purchasing new glass, and that it
benefits the environment by the reduction in landfill usage, the reduction of usage of raw materials and the lower utility costs for reusing bottles versus producing new bottles. The economics of using recycled glass varies based on the cost of
collection, sorting and handling, and may be affected by local regulation, and retailer, distributor and glass dealer behavior. There is no guarantee that the current economics of using returned glass will continue, or that the Company will continue
its current used glass practices.

Employees

As of December 29, 2012, the Company employed approximately 950 people, of which approximately 79 were covered by collective bargaining agreements at the Cincinnati Brewery. The representation
involves three labor unions with one contract expiring in 2015 and two expiring in 2017. The Company believes it maintains a good working relationship with all three labor unions and has no reason to believe that the good working relationship will
not continue. The Company has experienced no work stoppages, or threatened work stoppages, and believes that its employee relations are good.

Other

The Company submitted the
Section 12(a) CEO Certification to the New York Stock Exchange in accordance with the requirements of Section 303A of the NYSE Listed Company Manual. This Annual Report on Form 10-K contains at Exhibits 31.1 and 31.2 the
certifications of the Chief Executive Officer and Chief Financial Officer, respectively, in accordance with the requirements of Section 302 of the Sarbanes-Oxley Act of 2002. The Company makes available free of charge copies of its Annual
Report on Form 10-K, as well as other reports required to be filed by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, on the Companys website at www.bostonbeer.com, or upon written request to Investor Relations, The
Boston Beer Company, Inc., One Design Center Place, Suite 850, Boston, Massachusetts 02210.

In
addition to the other information in this Annual Report on Form 10-K, the risks described below should be carefully considered before deciding to invest in shares of the Companys Class A Common Stock. These are risks and uncertainties
that management believes are most likely to be material and therefore are most important for an investor to consider. The Companys business operations and results may also be adversely affected by additional risks and uncertainties not
presently known to it, or which it currently deems immaterial, or which are similar to those faced by other companies in its industry or business in general. If any of the following risks or uncertainties actually occurs, the Companys
business, financial condition, results of operations or cash flows would likely suffer. In that event, the market price of the Companys Class A Common Stock could decline.

The Company Faces Substantial Competition.

The Better Beer
category within the United States beer market is highly competitive, due to the large number of craft brewers with similar pricing and target drinkers and gains in market share achieved by domestic specialty beers and imported beers, a number of
which are now promoted or imported by the two largest domestic brewing companies, AB InBev and MillerCoors. The Company faces strong competition from these two brewers as they introduce new domestic specialty brands to many markets and expand their
efforts behind existing brands. Imported beers, such as Corona® and Heineken®, continue to compete aggressively in the United States beer market. Samuel Adams is one of the largest brands
in the Better Beer category of the United States brewing industry. The Company anticipates competition among domestic craft brewers to remain strong, as craft brewers experienced their eighth successive year of growth in 2012 and there were many new
startups. In 2012, the Company estimates there are approximately 3,600 breweries in operation or in the planning stages up from approximately 420 operating craft breweries in 2006. Also, existing craft breweries are building more capacity, expanding
geographically, adding more SKUs and styles as distributors and retailers are promoting and making more shelf space available for more craft beer brands. The continued growth in the sales of craft-brewed domestic beers and in imported beers is
expected to increase the competition in the Better Beer category within the United States beer market and, as a result, prices and market share of the Companys products may fluctuate and possibly decline. No assurance can be given that any
decline in price would be offset by an increase in market share.

The Companys products, including its Twisted
Tea and Angry Orchard products, also compete generally with other alcoholic beverages. The Company competes with other beer and beverage companies not only for drinker acceptance and loyalty, but also for shelf, cold box and tap space in
retail establishments and for marketing focus by the Companys distributors and their customers, all of which also distribute and sell other beers and alcoholic beverage products. Many of the Companys competitors, including Corona®, Heineken®, AB InBev and MillerCoors, have substantially greater financial resources, marketing strength and distribution networks than the Company. Moreover, the introduction
of new products by competitors that compete directly with the Companys products or that diminish the importance of the Companys products to retailers or distributors may have a material adverse effect on the Companys results of
operations, cash flows and financial position.

Further, in recent years, the beer industry has seen continued consolidation among brewers in
order to take advantage of cost savings opportunities for supplies, distribution and operations. Illustrative of this consolidation are the domestic joint venture between SABMiller and Molson Coors and the acquisition of Anheuser Busch by InBev,
both of which occurred in 2008, the acquisition of FEMSA Cerveza by Heineken in 2010, and the planned acquisition of Grupo Modelo by AB InBev. Due to the increased leverage that these combined operations will have, the costs to the Company of
competing could increase and the availability of brewing capacity could be reduced. The potential also exists for MillerCoors, AB InBev and Heineken to increase their influence with their distributors, making it difficult for smaller brewers to
maintain their market presence or enter new markets. These potential increases in the number and availability of competing brands, the costs to compete, reductions in contract brewing capacity and decreases in distribution support and opportunities
may have a material adverse effect on the Companys results of operations, cash flows and financial position.

The Companys future growth may be limited by both its ability to continue to increase its market share in domestic and international markets,
including those markets that may be dominated by one or more regional or local craft breweries, and by the growth in the craft-brewed beer market and the Better Beer market. The development of new products by the Company may lead to reduced sales in
the Companys other products, including its flagship Samuel Adams Boston Lager. The Companys future growth may also be limited by its ability to meet production goals at the Companys owned breweries, its ability to enter into
new brewing contracts with third party-owned breweries on commercially acceptable terms or the availability of suitable production capacity at third party-owned breweries, should production at the Companys owned breweries miss targets, and its
ability to obtain sufficient quantities of certain ingredients and packaging materials, such as hops and bottles, from suppliers.

The
Unpredictability and Fluctuation of the Companys Quarterly Results May Adversely Affect the Trading Price of Its Common Stock. The Companys Advertising and Promotional Investments May Not be Effective.

The Companys revenues and results of operations have in the past and may in the future vary from quarter to quarter due to a number of factors, many
of which are outside of the Companys control and any of which may cause its stock price to fluctuate. As a growth-oriented company, the Company has made, and expects to continue to make, significant advertising and promotional expenditures to
enhance its brands. These expenditures may not result in higher sales volume. Variations in the levels of advertising and promotional expenditures have in the past caused, and are expected in the future to continue to cause, variability in the
Companys quarterly results of operations. The Company has in the past made, and expects from time to time in the future to make, significant advertising and promotional expenditures to enhance its brands even though those expenditures may
adversely affect the Companys results of operations in a particular quarter or even for the full year, and may not result in increased sales. While the Company attempts to invest only in effective advertising and promotional expenditures, it
is difficult to correlate such investments with sales results, and there is no guarantee that the Companys expenditures will be effective in building brand equity or growing long term sales. In addition, the Company fills orders from its
wholesalers who may choose independently to build their inventories or run their inventories down.

Such a change in wholesaler inventories is
somewhat unpredictable, and can lead to fluctuations in the Companys quarterly or annual results.

Unexpected Events at
Company-Owned Breweries, Reduced Availability of Breweries Owned by Others, Increased Complexity of the Companys Business, or the Expansion Costs of the Company-Owned Breweries Could Have A Material Adverse Effect on the Companys
Operations or Financial Results.

Prior to 2008, the Company pursued a production strategy that combined the capacity at the Cincinnati
Brewery that was acquired in 1997, with significant production arrangements at breweries owned by third parties. The brewing services arrangements with breweries owned by others allowed the Company to utilize excess capacity, providing the Company
flexibility, as well as cost advantages over its competitors, while maintaining full control over the brewing process for the Companys beers. The Company purchased the Pennsylvania Brewery in June 2008. As a result, the volume of core brands
brewed at Company-owned breweries increased from approximately 35% in 2007 to virtually all of its volume in 2012.

In 2012, the Company
brewed its flagship beer, Samuel Adams Boston Lager, at each of its breweries, but at any particular time it may rely on only one brewery for its products other than Samuel Adams Boston Lager. The Company expects to brew almost all of
its core brands volume in 2013 at its Company-owned breweries and to have less reliance on brewing services arrangements with third parties. This increased reliance on its own breweries exposes the Company to capacity constraints, as these breweries
are operating close to current capacity in peak months. Nevertheless, management believes that it has secured sufficient alternatives for most of its

brands and packages in the event that production at any of its brewing locations is interrupted or discontinued, although it may not be able to maintain its current economics if such a disruption
were to occur and it might experience interruptions to supply. Potential disruptions at breweries include labor issues, governmental action, quality issues, contractual disputes, machinery failures or operational shut downs.

The combination of the Companys recent growth, increased product complexity, and its reliance on its own breweries, continues to increase the
operating complexity of the Companys business. There can be no assurance that the Company will effectively manage such increasing complexity, without experiencing planning failures, operating inefficiencies, control deficiencies or other
issues that could have a material adverse effect on the Companys business. The growth of the Company, changes in operating procedures and increased complexity, are also requiring significant capital investment.

While the Company has shifted its production to its own breweries, it continues to avail itself of capacity at third-party breweries. During 2012, the
Company brewed and/or packaged certain products under service contracts at facilities located in Latrobe, Pennsylvania and Hammondsport, New York. In selecting third party breweries for brewing services arrangements, the Company carefully weighs
brewerys (i) capability of utilizing traditional brewing methods and (ii) first rate quality control capabilities throughout brewing, fermentation, finishing and packaging. To the extent that the Company needs to avail itself of
third party brewing services arrangement, it exposes itself to higher than planned costs of operating under such contract arrangements than would apply at the Company-owned breweries or an unexpected decline in the brewing capacity available to it,
either of which could have a material adverse effect on the Companys results of operations, cash flows and financial position.

As the
brewing industry continues to consolidate, the financial stability of the breweries owned by others where the Company could brew some of its beers, if necessary, and their ability or willingness to meet the Companys needs, has become a more
significant concern and there are no guarantees that the Companys brewing needs will be met. The Company continues to work with all of the breweries at which it might brew its products in an attempt to minimize any potential interruptions.
Nevertheless, should an interruption occur, the Company could experience temporary shortfalls in production and/or increased production or distribution costs, and be required to make significant capital investments to secure alternative capacity for
certain brands and packages, the combination of which could have a material adverse effect on the Companys results of operations, cash flows and financial position. A simultaneous interruption at several of the Companys production
locations or an unexpected interruption at one of the Company-owned breweries would likely cause significant disruption, increased costs and, potentially, lost sales.

The Company Is Dependent on Its Distributors.

In the United States, where
approximately 97% of its beer is sold, the Company sells its beer to independent beer distributors for distribution to retailers and, ultimately, to drinkers. Although the Company currently has arrangements with approximately 340 wholesale
distributors, sustained growth will require it to maintain such relationships and possibly enter into agreements with additional distributors. Changes in control or ownership of the current distribution network could lead to less support of the
Companys products. No assurance can be given that the Company will be able to maintain its current distribution network or secure additional distributors on terms favorable to the Company.

Contributing to distribution risk is the fact that the Companys distribution agreements are generally terminable by the distributor on short
notice. While these distribution agreements contain provisions giving the Company enforcement and termination rights, some state laws prohibit the Company from exercising these contractual rights. The Companys ability to maintain its existing
distribution agreements may be adversely affected by the fact that many of its distributors are reliant on one of the major beer producers for a large percentage of their revenue and, therefore, they may be influenced by such producers. If the
Companys existing distribution agreements are terminated, it may not be able to enter into new distribution agreements on substantially similar terms, which may result in an increase in the costs of distribution.

The Company Expects That the Freshest Beer Program Will Adversely Affect Short-term Operating Results
and Cash Flow During Implementation and Could Disrupt the Companys Business.

In late 2010, the Company started a Freshest Beer
Program with domestic wholesalers in different markets to reduce both the time and temperature the Companys beers experience at wholesaler warehouses before reaching the market. Historically, wholesalers carry three to five weeks of packaged
inventory (usually at ambient temperatures) and three to four weeks of draft inventory. The Companys goal is to reduce this through better on-time service, forecasting, production planning and cooperation with the wholesalers. At
December 29, 2012, the Company had 89 wholesalers participating in the program at various stages of inventory reduction. The Company has over 59% of its volume on the Freshest Beer Program and believes this could reach 65 to 75% by the end of
2013. The Company successfully reduced the inventories of participating wholesalers by approximately two weeks, resulting in fresher beer being delivered to retail. The Freshest Beer Program has resulted in lower shipments of approximately 50,000,
133,000 and 241,000 case equivalents in 2010, 2011 and 2012 respectively when measured at the end of the year, which historically has been the low point of the year for wholesaler inventories. The wholesaler ordering process has changed
significantly for wholesalers that participate in the Freshest Beer Program and has resulted in a shorter period between order placement and shipment and posed much greater challenges for forecasting and production planning. Also, changes to the
wholesaler ordering process has increased the complexity of the Companys revenue recognition for shipments to wholesalers that participate in the Freshest Beer Program.

It is possible that the Freshest Beer Program may not ultimately be successful; that its costs of implementation may exceed the value realized or that the outcome of such inventory reductions may prove
detrimental to the Companys business trends and ability to execute at retail. The Company may encounter unexpected problems with forecasting, accounting, production and wholesaler cooperation. These issues could lead to shortages and out of
stocks of the Companys products at the wholesaler and retailer levels, result in increased costs, negatively impact wholesaler relations, and/or delay the Companys implementation of this program.

Because the Company is still in the process of rolling out the Freshest Beer Program, there necessarily remain implementation and execution issues to be
addressed. As a result, the Company currently cannot predict with any precision the long-term success of this program, the scope of its further implementation in 2013 or the full extent of the costs or business impacts associated with the program
that might be incurred. The Company currently believes the program will, in the long term, be beneficial to its business, but there can be no assurances that this result will be achieved or, if achieved, to what extent.

The Company is Dependent on Key Suppliers, Including Foreign Sources; Its Dependence on Foreign Sources Creates Foreign Currency Exposure for the
Company; The Companys Use of Natural Ingredients Creates Weather and Crop Reliability and Excess Inventory Exposure for the Company.

The Company purchases a substantial portion of the raw materials used in the brewing of its products, including its malt, hops, barley and other ingredients, from a limited number of foreign and domestic
suppliers. The Company purchased most of the malt used in the production of its beer from two major suppliers during 2012. The Company believes that there are other malt vendors available that are capable of supplying part of its needs. The Company
is exposed to the quality of the barley crop each year, and significant failure of a crop would adversely affect the Companys costs.

The Company predominantly uses Noble hops for its Samuel Adams lagers. Noble hops are varieties from several specific growing areas recognized for
superior taste and aroma properties and include Hallertau-Hallertauer, Tettnang-Tettnanger, Hersbruck-Hersbrucker and Spalt-Spalter from Germany and Saaz-Saazer from the Czech Republic. Noble hops are rare and more expensive than most other
varieties of hops. Traditional English hops, namely, East Kent Goldings and English Fuggles, along with United States hops are used in most of the Companys ales. The Company enters into purchase commitments with six hops dealers, based on the
Companys projected future volumes and brewing needs. The dealers then contract with farmers to meet the Companys needs. However, the performance and availability of the hops may be materially adversely affected

by factors such as adverse weather, the use of fertilizers and pesticides that do not conform to United States regulations, the imposition of export restrictions (such as increased tariffs and
duties) and changes in currency exchange rates resulting in increased prices. The Company attempts to maintain approximately two years supply of essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply.
The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site. Hops and malt are agricultural products and therefore many outside factors, including weather conditions, farmers rotating out
of hops or barley to other crops, government regulations and legislation affecting agriculture, could affect both price and supply.

The
Company uses special varieties of apples in its ciders that it believes are important for the ciders flavor profile. These apples are purchased from European suppliers and include bittersweet apples from France and culinary apples from Italy.
There is limited availability of these apples and many outside factors, including weather conditions, farmers rotating from apples to other crops, government regulations and legislation affecting agriculture, could affect both price and supply.
During 2012, the Company experienced shortages of apples that impacted shipments to wholesalers. In late 2012, the Company entered into purchase commitments with apple suppliers, designed to cover its 2013 needs. The Company is evaluating entering
into multiple year contracts for apples with various suppliers.

Historically, other than the apple shortages discussed above, the Company has
not experienced material difficulties in obtaining timely delivery from its suppliers, although the Company has had to pay significantly above historical prices to secure supplies when inventory and supply have been tight. Although the Company
believes that there are alternate sources available for some of the ingredients and packaging materials, there can be no assurance that the Company would be able to acquire such ingredients or packaging materials from substitute sources on a timely
or cost effective basis in the event that current suppliers could not adequately fulfill orders. The loss or significant reduction in the capability of a supplier to support the Companys requirements could, in the short-term, adversely affect
the Companys results of operations, cash flows and financial position until alternative supply arrangements were secured.

The
Companys contracts for certain hops and apples that are payable in Euros and Pounds Sterling, and therefore, the Company is subject to the risk that the Euro or Pound may fluctuate adversely against the U.S. dollar. The Company has, as a
practice, not hedged this exposure, although this practice is regularly reviewed. Significant adverse fluctuations in foreign currency exchange rates may have a material adverse effect on the Companys results of operations, cash flows and
financial position. Currently, the cost of hops is approximately 3% of the Companys product cost. The cost of hops has greatly increased in recent years due to exchange rate changes and the rising market price of hops, and continuation of
these trends will impact the Companys product cost and potentially the Companys ability to meet demand. The Company also buys some other ingredients and capital equipment from foreign suppliers for which the Company also carries exposure
to foreign exchange rate changes.

The Companys accounting policy for hop inventory and purchase commitments is to recognize a loss by
establishing a reserve to the extent inventory levels and commitments exceed managements expected future usage. The computation of the excess inventory requires management to make certain assumptions regarding future sales growth, product mix,
cancellation costs and supply, among others. Actual results may differ materially from managements estimates. The Company continues to manage inventory levels and purchase commitments in an effort to maximize utilization of hops on hand and
hops under commitment. However, changes in managements assumptions regarding future sales growth, product mix and hops market conditions could result in future material losses.

An Increase in Packaging Costs Could Harm the Companys Financial Results.

The
Company maintains multiple sources of supply for most of its packaging materials, such as shipping cases, six-pack carriers and crowns. Currently, glass and labels for core brands are each supplied by single sources. Although the Company believes
that alternative suppliers are available, the loss of the Companys glass or other

packaging materials suppliers could, in the short-term, adversely affect the Companys results of operations, cash flows and financial position until alternative supply arrangements were
secured. If packaging costs continue to increase, there is no guarantee that such costs can be fully passed along to drinkers through increased prices. The Company has entered into long-term supply agreements for certain packaging materials that
have shielded it from some cost increases. These contracts have varying lengths and terms and there is no guarantee that the economics of these contracts can be replicated at time of renewal. The Companys inability to preserve the current
economics on renewal could expose the Company to significant cost increases in future years.

The Company initiates bottle deposits in some
states and reuses glass bottles that are returned pursuant to certain state bottle recycling laws. The cost associated with reusing the glass varies. The Company believes that it benefits economically from cleaning and reusing these bottles, which
result in a lower cost than purchasing new glass, and that it benefits the environment by the reduction in landfill usage, the reduction of usage of raw materials and the lower utility costs for reusing bottles versus producing new bottles. The
economics of using recycled glass varies based on the cost of collection, sorting and handling, retailer, distributor and glass dealer behavior, the availability of equipment and service providers that will clean bottles for reuse, and may be
adversely affected by changes in state regulation. There is no guarantee that the current economics of using returned glass will continue, or that the Company will continue its current used glass practices.

An Increase in Energy Costs Could Harm the Companys Financial Results.

In the last five years, the Company has experienced significant increases in direct and indirect energy costs, and energy costs could continue to rise. Increasing energy costs would result in higher
transportation, freight and other operating costs, including increases in the cost of ingredients and supplies. The Companys future operating expenses and margins could be dependent on its ability to manage the impact of such cost increases.
If energy costs continue to increase, there is no guarantee that such costs can be fully passed along to drinkers through increased prices.

The Companys Operations are Subject to Certain Operating Hazards. The Company Was Involved in a Product Recall in 2008 and There Is No
Guarantee That Other Contamination Problems Will Not Develop That Could Harm the Companys Business.

The
Companys operations are subject to certain hazards and liability risks faced by all brewers, such as potential contamination of ingredients or products by bacteria or other external agents that may be wrongfully or accidentally introduced into
products or packaging. As discussed elsewhere, the Company announced a voluntary product recall of certain glass bottles of its Samuel Adams® products during 2008. The recall resulted from routine quality control inspections where glass inclusions were detected in certain bottles of beer. The Company
substantially completed the recall process during 2008. While the Company does not anticipate repetition of such problems, the Companys operations are subject to a range of operating hazards which include product contamination, the occurrence
of which could result in unexpected costs to the Company, and in the case of a costly product recall, potentially serious damage to the Companys reputation for product quality, as well as claims for product liability.

Changes in tax, environmental and other regulations or failure to comply with existing licensing, trade or other regulations could have a material
adverse effect on the Companys financial condition.

The Companys business is highly regulated by federal, state and local
laws and regulations regarding such matters as licensing requirements, trade and pricing practices, labeling, advertising, promotion and marketing practices, relationships with distributors, environmental impact of operations and other matters.
These laws and regulations are subject to frequent reevaluation, varying interpretations and political debate and inquiries from governmental regulators charged with their enforcement. Failure to comply with current or changes to existing laws and
regulations relating to the Companys operations or in the payment of taxes or other fees could result in the loss, revocation or suspension of the Companys licenses, permits or approvals, and could have a material adverse effect on the
ability of the Companys business, financial condition and results of operations.

Changes in Public Attitudes and Drinker Tastes Could Harm the Companys Business. Regulatory
Changes in Response to Public Attitudes Could Adversely Affect the Companys Business.

The alcoholic beverage industry has become
the subject of considerable societal and political attention in recent years, due to increasing public concern over alcohol-related social problems, including drunk driving, underage drinking and health consequences from the misuse of alcohol,
including alcoholism. As an outgrowth of these concerns, the possibility exists that advertising by beer producers could be restricted, that additional cautionary labeling or packaging requirements might be imposed, that further restrictions on the
sale of alcohol might be imposed or that there may be renewed efforts to impose increased excise or other taxes on beer sold in the United States. The domestic beer industry, other than Better Beers, has experienced a slight decline in shipments
over the last ten years. The Company believes that this slower growth is due to both declining alcohol consumption per person in the population and increased competition from wine and spirits companies. If beer consumption in general were to come
into disfavor among domestic drinkers, or if the domestic beer industry were subjected to significant additional governmental regulations, the Companys business could be materially adversely affected.

In addition, there has been a recent focus by state and federal authorities on caffeinated alcoholic beverages. In November 2010, in response to intense
media attention regarding the misuse of high alcohol malt beverages with added caffeine that are marketed as energy drinks, the United States Food and Drug Administration (FDA) informed producers of these products that it has not
approved the use of caffeine as an additive in alcoholic beverages and thus, such beverages can be lawfully marketed only if their use is subject to prior FDA approval or is otherwise generally recognized as safe. As a result, several producers have
reformulated their products to remove the added caffeine. The Companys Twisted Tea products and certain other craft styles contain naturally-occurring, but not added, caffeine, so the recent FDA pronouncements do not apply.
Nevertheless, there is an inherent risk that the concern about added caffeine in alcoholic beverages could subsequently be applied to naturally occurring caffeine, adversely affecting the Companys products in the future. In addition, this
regulatory attention to caffeinated alcoholic beverages included concerns about the availability of malt beverages in larger size single serve containers, which could adversely affect the Companys ability to sell certain of its beers and
flavored malt beverages in certain single serve packages.

The Company Has Been Involved in Various Litigation Matters in the Past and
there Is No Guarantee that Other Litigation Will Not Develop that Could Harm the Companys Business.

The Company is currently not
a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations. In general, while the Company believes it conducts its business
appropriately in accordance with laws, regulations and industry guidelines, claims, whether or not meritorious, could be asserted against the Company that might adversely impact the Companys results. See Item 3  Legal
Proceedings below.

The Class B Shareholder Has Significant Influence over the Company

The Companys Class A Common Stock is not entitled to any voting rights, except for the right as a class to approve certain mergers and charter
and by-law amendments and to elect a minority of the directors of the Company. Consequently, the election of a majority of the Companys directors and all other matters requiring stockholder approval are currently decided by C. James Koch,
Chairman of the Board of Directors of the Company, as the holder of 100% of the outstanding shares of the Companys Class B Common Stock. As a result, Mr. Koch is able to exercise substantial influence over all matters requiring
stockholder approval, including the composition of the board of directors, approval of equity-based and other executive compensation and other significant corporate and governance matters, such as approval of the Companys independent
registered public accounting firm. This could have the effect of delaying or preventing a change in control of the Company and makes most material transactions difficult or impossible to accomplish without the support of Mr. Koch. In addition,
Mr. Koch could transfer some shares of the Class B Common Stock to others, which could impact the nature of the control currently held by him as the sole holder of the Class B Common Stock.

Impact of Changes in Drinker Attitudes on Brand Equity and Inherent Risk of
Reliance on the Companys Founder in the Samuel Adams® Brand Communications.

There is no guarantee that the brand equities that the Company has built in its brands will continue to appeal to drinkers. Changes in drinker attitudes
or demands could adversely affect the strength of the brands and the revenue that is generated from that strength. It is possible that the Company could react to such changes and reposition its brands, but there is no certainty that the Company
would be able to maintain volumes, pricing power and profitability. It is also possible that marketing messages or other actions taken by the Company could damage the brand equities as opposed to building them. If such damage should occur, it could
have a negative effect on the financial condition of the Company.

In addition to these inherent brand risks, the founder and Chairman of the
Company, C. James Koch, is an integral part of the Companys current Samuel Adams brand message and the Company relies on the positive public perception of its founder. The role of Mr. Koch as founder, brewer and leader of the
Company is emphasized as part of the Companys brand communication and has appeal to some drinkers. If Mr. Koch were not available to the Company to continue his active role, his absence could detrimentally affect the strength of the
Companys messaging and, accordingly, the Companys growth prospects. If this were to occur, the Company might need to adapt its strategy for communicating its key messages regarding its traditional brewing processes, brewing heritage and
quality. Any such change in the Companys messaging strategy might have a detrimental impact on the future growth of the Company.

The Companys Operating Results and Cash Flow May Be Adversely Affected by Unfavorable Economic and Financial Market Conditions.

Volatility and uncertainty in the financial markets and economic conditions may directly or indirectly affect the Companys
performance and operating results in a variety of ways, including: (a) prices for energy and agricultural products may rise faster than current estimates; (b) the Companys key suppliers may not be able to fund their capital
requirements, resulting in disruption in the supplies of the Companys raw and packaging materials; (c) the credit risks of the Companys wholesalers may increase; (d) the Companys credit facility, or portion thereof, may
become unavailable at a time when needed by the Company to meet critical needs; (e) overall beer consumption may decline; or (f) drinkers of the Companys beers may change their purchase preferences and frequency, which might result
in sales declines.

Volatile and uncertain financial markets and economic conditions may cause disruption in the Companys operations and
cash flow and reduce its gross profit and gross margin, as described above, and may also increase the Companys advertising, promotional and selling and general and administrative costs, and therefore adversely impact our operating results.

The Company has Significantly Increased its Product Offerings and Distribution Footprint which Increases Complexity and Could Adversely
Affect the Companys Business.

The Company has significantly increased the number of commercially available beers, FMBs and
ciders. Since 2010, the Company has introduced over 30 new beers under the Samuel Adams brand name. During 2012, the Company completed its national distribution for both Twisted Tea and Angry Orchard brand families and
added additional styles. Also during 2012, Alchemy & Science purchased the assets of Southern California Brewing Company, Inc., a Los Angeles based craft brewer doing business as Angel City Brewing Company, which includes a small
brewery and a beer hall where beer will be sold and consumed on premise. In addition, Alchemy & Science launched five beers under two brand names and the Company expects Alchemy & Science to roll out additional brands in 2013.
These additional brands along with the increases in activity for existing brands have added to the complexity of the Companys beer and cider development process as well as its brewing, packaging, marketing and selling processes. The Company
does not have experience with managing

this number of brands and products and has limited experience with integrating acquired brands or operating beer halls. There can be no assurance that the Company will effectively
manage such increased complexity without experiencing operating inefficiencies or control deficiencies. Such inefficiencies or deficiencies could have a material adverse effect on the Companys business.

Item 1B.

Unresolved Staff Comments

The Company has not received any written comments from the staff of the Securities and Exchange Commission (the SEC) regarding the Companys periodic or current reports that (1) the
Company believes are material, (2) were issued not less than 180 days before the end of the Companys 2012 fiscal year, and (3) remain unresolved.

Item 2.

Properties

The
Company maintains its principal corporate offices in approximately 42,400 square feet of leased space located in Boston, Massachusetts, the initial term of which is set to expire in 2017. The Company also leases a small sales office in California
and an office in Vermont.

The Company maintains a brewery and tour center in Boston, Massachusetts in approximately 37,000 square feet of
leased space. The current term of the lease for this facility will expire in 2019.

The Company owns approximately 69 acres of land in
Breinigsville, Pennsylvania, on which the Companys Pennsylvania Brewery is located. The buildings on this property consist of approximately 853,000 square feet of brewery and warehouse space.

The Company leases approximately 48,650 square feet of space in Los Angeles, California which includes a small brewery, beer hall and tour center. The
current term of the lease for this facility will expire in 2021.

The Company owns approximately 10 acres of land in Cincinnati, Ohio, on
which the Companys Cincinnati Brewery is located. The buildings on this property consist of approximately 128,500 square feet of brewery and warehouse space.

The Company owns 52.7 acres of vacant land in Freetown, Massachusetts which is currently on the market for sale.

The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available on commercially acceptable terms as required.

Item 3.

Legal Proceedings

In 2009, the Company was informed that ownership of the High Falls brewery located in Rochester, New York (the Rochester Brewery) changed and
that the new owners would not assume the Companys existing contract for brewing services at the Rochester Brewery. Brewing of the Companys products at the Rochester Brewery subsequently ceased in April 2009. In February 2010, the Company
filed a Demand for Arbitration with the American Arbitration Association (the arbitration) which, as amended, asserted a breach of contract claim against the previous owner of the Rochester Brewery. In March 2010, the new and previous
owners of the Rochester Brewery filed a complaint in federal court seeking a declaratory judgment and injunction to require certain of the Companys claims to proceed in court, rather than in the arbitration. In April 2010, the Company filed an
answer to that complaint and asserted certain counterclaims, including a claim against the new owners of the Rochester Brewery for interference with contract. The court denied the new and previous owners motion for a preliminary injunction in
June 2010. A hearing in the arbitration was held in October 2010. In January 2011, the arbitrator issued an award of approximately $1.3 million in damages and expenses to be paid by

High Falls Brewery Company, LLC to the Company, although the likelihood of collection of such award is in doubt. In August 2011, the district court granted the previous owners motion to
dismiss the interference claim, and in June 2012 the court denied a motion to amend that claim. The Company filed an appeal of those rulings in September 2012, which is pending.

The Company is currently not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its
operations.

The graph set forth below shows the value of an investment of $100 on January 1, 2008 in each of the Companys stock (The Boston Beer
Company, Inc.), the Standard & Poors 500 Index (S&P 500 Index), the Standard & Poors 500 Beverage Index, which consists of producers of alcoholic and non-alcoholic beverages (S&P 500
Beverages Index) and a custom peer group which consists of Molson Coors Brewing Company and Craft Brewers Alliance, Inc. (formerly Redhook Ale Brewery, Inc.), the two remaining U.S. publicly-traded brewing companies (Peer Group),
for the five years ending December 29, 2012.

The Companys Class A Common Stock is listed for trading on the New York Stock Exchange. The Companys
NYSE symbol is SAM. For the fiscal periods indicated, the high and low per share sales prices for the Class A Common Stock of The Boston Beer Company, Inc. as reported on the New York Stock Exchange-Composite Transaction Reporting System were
as follows:

Fiscal 2012

High

Low

First Quarter

$

106.79

$

94.52

Second Quarter

$

121.00

$

98.31

Third Quarter

$

127.98

$

100.96

Fourth Quarter

$

139.24

$

105.19

Fiscal 2011

High

Low

First Quarter

$

97.66

$

85.19

Second Quarter

$

94.86

$

80.01

Third Quarter

$

92.31

$

73.50

Fourth Quarter

$

112.88

$

72.13

There were 13,075 holders of record of the Companys Class A Common Stock as of February 15, 2013. Excluded
from the number of stockholders of record are stockholders who hold shares in nominee or street name. The closing price per share of the Companys Class A Common Stock as of February 15, 2013, as reported under the
New York Stock Exchange-Composite Transaction Reporting System, was $147.53.

Class A Common Stock

At December 29, 2012, the Company had 22,700,000 authorized shares of Class A Common Stock with a par value of $.01, of which 8,703,670 were
issued and outstanding. The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the Class A Common Stock is
required for (a) future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles
of Organization of the Company, (c) certain other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and (e) sales or dispositions of any
significant portion of the Companys assets.

At December 29, 2012, the Company had 4,200,000 authorized shares of Class B Common Stock with a par value of $.01, of which 4,107,355 shares were issued and outstanding. The Class B Common Stock has
full voting rights, including the right to (1) elect a majority of the members of the Companys Board of Directors and (2) approve all (a) amendments to the Companys Articles of Organization, (b) mergers or
consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Companys assets and (d) equity-based and other executive compensation and other significant corporate matters, such
as approval of the Companys independent registered public accounting firm. The Companys Class B Common Stock is not listed for trading. Each share of Class B Common Stock is freely convertible into one share of Class A Common Stock,
upon request of any Class B holder.

As of February 15, 2013, C. James Koch, the Companys Chairman, was the sole holder of record
of all the Companys issued and outstanding Class B Common Stock.

The holders of the Class A and Class B Common Stock are entitled
to dividends, on a share-for-share basis, only if and when declared by the Board of Directors of the Company out of funds legally available for payment thereof. Since its inception, the Company has not paid dividends and does not currently
anticipate paying dividends on its Class A or Class B Common Stock in the foreseeable future.

Repurchases of the Registrants
Class A Common Stock

On October 1, 2012, the Board of Directors of the Company increased the aggregate expenditure limit for the
Companys Stock Repurchase Program by $25.0 million, thereby increasing the limit from $275.0 million to $300.0 million. As of December 29, 2012, the Company has repurchased a cumulative total of approximately 10.7 million shares of
its Class A Common Stock for an aggregate purchase price of approximately $269.9 million.

During the twelve months ended
December 29, 2012, the Company repurchased 165,192 shares of its Class A Common Stock as illustrated in the table below:

Period

TotalNumber ofSharesPurchased

AveragePrice Paidper Share

Total Number ofShares Purchased asPart of PubliclyAnnouncedPlans
orPrograms

Approximate DollarValue of Sharesthat May Yet bePurchasedUnder thePlans or Programs

Of the shares that were purchased during the period, 2,306 shares represent repurchases of unvested
investment shares issued under the Investment Share Program of the Companys Employee Equity Incentive Plan.

Item 6.

Selected Consolidated Financial Data

Year Ended

Dec. 292012

Dec. 312011(53
weeks)

Dec. 252010

Dec. 262009

Dec. 272008

(in thousands, except per share and net revenue per barrel data)

Income Statement Data:

Revenue

$

628,580

$

558,282

$

505,870

$

453,446

$

449,554

Less recall returns









13,222

Less excise taxes

48,358

45,282

42,072

38,393

37,932

Net revenue

580,222

513,000

463,798

415,053

398,400

Cost of goods sold

265,012

228,433

207,471

201,235

205,040

Recall related costs









9,473

Gross profit

315,210

284,567

256,327

213,818

183,887

Operating expenses:

Advertising, promotional and selling expenses

169,306

157,261

135,737

121,560

132,901

General and administrative expenses

50,171

43,485

39,112

36,938

34,988

Impairment of long-lived assets

149

666

300

1,049

1,936

Settlement proceeds



(20,500

)







Total operating expenses

219,626

180,912

175,149

159,547

169,825

Operating income

95,584

103,655

81,178

54,271

14,062

Other (expense) income, net

(67

)

(155

)

(70

)

96

1,778

Income before provision for income taxes

95,517

103,500

81,108

54,367

15,840

Provision for income taxes

36,050

37,441

30,966

23,249

7,752

Net income

$

59,467

$

66,059

$

50,142

$

31,118

$

8,088

Net income per share  basic

$

4.60

$

5.08

$

3.67

$

2.21

$

0.58

Net income per share  diluted

$

4.39

$

4.81

$

3.52

$

2.17

$

0.56

Weighted average shares outstanding  basic

12,796

13,012

13,660

14,059

13,927

Weighted average shares outstanding  diluted

13,435

13,741

14,228

14,356

14,341

Balance Sheet Data:

Working capital

$

73,448

$

58,674

$

39,805

$

39,244

$

1,797

Total assets

$

359,484

$

272,488

$

258,530

$

262,936

$

219,757

Total long-term obligations

$

25,499

$

20,694

$

20,743

$

15,995

$

12,672

Total stockholders equity

$

245,091

$

184,745

$

165,588

$

173,155

$

140,028

Statistical Data:

Barrels sold

2,746

2,484

2,272

2,222

2,341

Net revenue per barrel

$

211

$

207

$

204

$

187

$

170

Item 7.

Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

In this Form
10-K and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words may, will, expect, anticipate, continue,
estimate, project, intend, designed, and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Companys
future plans of operations, business strategy, results of operations, and financial position. These statements are based on the

Companys current expectations and estimates as to prospective events and circumstances about which the Company can give no firm assurance. Further, any forward-looking statement speaks only
as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events or circumstances. Forward-looking statements should not be relied upon as a prediction of
actual future financial condition or results. These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks
and uncertainties include the factors set forth above and the other information set forth in this Form 10-K.

Introduction

The Boston Beer Company is engaged in the business of producing and selling alcohol beverages primarily in the domestic market and, to a lesser extent, in
selected international markets. The Companys revenues are derived by selling its beers and ciders to distributors, who in turn sell the products to retailers and drinkers.

The Companys beers compete primarily in the Better Beer category, which includes imported beers and craft beers. This category has seen high single-digit compounded annual growth over the past ten
years. Defining factors for Better Beer include superior quality, image and taste, supported by appropriate pricing. The Company believes that the Better Beer category is positioned to increase market share as drinkers continue to trade up in taste
and quality. The Company estimates that in 2012 the craft beer category grew approximately 11% to 13%, while the Better Beer category was up approximately 6% to 7%, while the total beer category was up approximately 1%. The Company believes that the
Better Beer category is approximately 22% of United States beer consumption by volume. The Company believes that significant opportunity to gain market share continues to exist for the Better Beer category. Depletions of the Companys beers and
ciders, or distributor sales to retailers, increased approximately 12% in 2012 from the comparable 52 week period in the prior year.

Outlook

Year-to-date depletions
reported to the Company for 6 weeks ended February 9, 2013 are estimated by the Company to be up approximately 15% from the comparable period in 2012.

The Company is targeting earnings per diluted share for 2013 of between $4.70 and $5.10, but actual results could vary significantly from this target. The Company is currently planning that 2013
depletions and shipments growth will be approximately 10% to 15%. The Company believes that the competitive pricing environment will be challenging and is planning pricing increases of approximately 1% to 2% to partially offset cost pressures.
Full-year 2013 gross margins are currently expected to be between 53% and 55% due to anticipated price increases not fully covering cost pressures and some product mix changes. The Company intends to increase advertising, promotional and selling
expenses of between $18 million and $26 million for the full year 2013 primarily due to planned increased investments behind our brands and these increases exclude increases in freight costs for the shipment of products to the Companys
wholesalers. The Company estimates increases of $2 million to $4 million for continued investment in existing brands developed by Alchemy & Science, which are included in our full year estimated increases in advertising, promotional and
selling expenses. Additional projects yet to be developed or acquired may significantly increase investments in Alchemy & Science and advertising, promotional and selling expenses. The Company believes that its 2013 effective tax rate will
be approximately 38%.

The Company is continuing to evaluate 2013 capital expenditures and, based on current information, its initial
estimates are between $70 million and $85 million, most of which relate to continued investments in its breweries, as well additional keg purchases. The Company anticipates an annual capital investment level after 2013 to be between $30 million and
$50 million, including capacity expansion initiatives to accommodate expected growth; however, the actual amount spent may well be different from these estimates. Based on information currently available, the Company believes that its capacity
requirements for 2013 can be covered by its Company-owned breweries and existing contracted capacity at third-party brewers.

Boston Beers flagship product is Samuel Adams Boston Lager®.
For purposes of this discussion, Boston Beers core brands or core products include all products sold under the Sam Adams®, Twisted Tea®, Angry Orchard®, House of Shandy®, and Angel City Brewery®
trademarks. Core products do not include the products brewed or packaged at the Companys brewery in Cincinnati, Ohio (the Cincinnati Brewery) under a contract arrangement for a third party. Sales of such products are
not significant to the Companys net revenues.

The following table sets forth certain items included in the Companys consolidated
statements of income as a percentage of net revenue:

Year Ended

Dec. 292012

Dec. 312011(53 weeks)

Dec. 252010

Barrels Sold (in thousands)

Core brands

2,727

2,471

2,259

Non-core products

19

13

13

Total barrels

2,746

2,484

2,272

Percentage of Net Revenue

Net revenue

100

%

100.0

%

100.0

%

Cost of goods

45.7

44.5

44.7

Gross profit

54.3

55.5

55.3

Advertising, promotional and selling expenses

29.2

30.7

29.3

General and administrative expenses

8.7

8.5

8.4

Impairment of long-lived assets



0.1

0.1

Settlement proceeds



(4.0

)



Total operating expenses

37.9

35.3

37.8

Operating income

16.4

20.2

17.5

Interest income, net

0.0

0.0

0.0

Other (expense) income, net

0.0

0.0

0.0

Income before provision for income taxes

16.4

20.2

17.5

Provision for income taxes

6.2

7.3

6.7

Net income

10.2

%

12.9

%

10.8

%

Year Ended December 29, 2012 (52 weeks) Compared to Year Ended December 31, 2011 (53 weeks)

Fiscal periods. The 2012 fiscal year consisted of 52 weeks as compared to 53 weeks in fiscal
2011 and 52 weeks in fiscal 2010.

Net revenue. Net revenue increased by $67.2 million, or 13.1%, to $580.2
million for the year ended December 29, 2012, from $513.0 million for the year ended December 31, 2011. This increase was due primarily to an increase in core brand shipment volume and pricing gains.

Volume.Total shipment volume increased by 10.6% to 2,746,000 barrels for the year ended
December 29, 2012, as compared to 2,484,000 barrels for the year ended December 31, 2011, due to an increase in core brand shipments. Shipment volume for the core brands increased by 10.4% to 2,727,000 barrels, due primarily to increases
in Angry Orchard,,Twisted Tea and
Samuel Adams Seasonals, offset by declines in some other Samuel Adams styles.

Fiscal year shipments volume increases for core brands of 10.3% were lower than the 52 week depletions
increases of approximately 12% primarily due to the additional shipping week in fiscal 2011. The Company believes wholesaler inventory levels at December 29, 2012 were at appropriate levels. Inventory at wholesalers participating in the
Freshest Beer Program was lower by an estimated 241,000 cases at December 29, 2012 compared to December 31, 2011, reducing reported earnings per diluted share by approximately $0.08 for the 2012 fiscal year.

Net selling price. The net selling price per barrel for core brands increased by 2.5% to $212.37 per barrel for the year
ended December 29, 2012, as compared to $207.26 for the same period last year. This increase in net selling price per barrel is primarily due to price increases taken in 2012, partially offset by the change in accounting treatment for certain
customer programs and incentives costs.

Significant changes in the package mix could have a material effect on net revenue. The Company
primarily packages its core brands in kegs, bottles, and in cans for certain Twisted Tea styles. Assuming the same level of production, a shift in the mix from bottles and cans to kegs would effectively decrease revenue per barrel, as
the price per equivalent barrel is lower for kegs than for bottles and cans. The percentage of bottles and cans to total shipments increased by 0.5% to 73.5% of total shipments for the year ended December 29, 2012 as compared to 2011.

Gross profit. Gross profit for core brands was $115.50 per barrel for the year ended December 29, 2012, as
compared to $115.08 for the year ended December 31, 2011. Gross margin for core brands was 54.4% for the year ended December 29, 2012, as compared to 55.5% for the year ended December 31, 2011. The increase in gross profit per barrel
of $0.42 is primarily due to an increase in net revenue per barrel, partially offset by an increase in cost of goods sold per barrel.

Cost of
goods sold for core brands was $96.87 per barrel, or 45.6% as a percentage of net revenue, for the year ended December 29, 2012, as compared to $92.18 per barrel, or 44.5% as a percentage of net revenue, for the year ended December 31,
2011. The 2012 increase in cost of goods sold for core brands of $4.70 per barrel is primarily due to increases in barley, hops and other ingredients combined with increased customer programs and incentives costs.

The Company includes freight charges related to the movement of finished goods from manufacturing locations to distributor locations in its advertising,
promotional and selling expense line item. As such, the Companys gross margins may not be comparable to other entities that classify costs related to distribution differently.

Advertising, promotional and selling. Advertising, promotional and selling expenses increased by $12.0 million, or 7.7%, to $169.3 million for the year ended
December 29, 2012, as compared to $157.3 million for the year ended December 31, 2011. The increase is primarily as a result of increased investments in advertising and local marketing of $6.2 million, increased size of the sales force and
increased salaries, benefits and operating costs of $3.8 million, as well as increased freight expenses to wholesalers of $5.3 million. Advertising, promotional and selling expenses for the year ended December 29, 2012 exclude approximately
$6.3 million in payments for certain customer programs and incentives for the full year that in the fourth quarter of 2012 were classified as reductions in revenue. These brand investments have historically been recorded as advertising, promotional
and selling expenses.

Such expenses for core brands were 29.2% of net revenue, or $62.09 per barrel, for the year ended December 29,
2012, as compared to 30.7% of net revenue, or $63.64 per barrel, for the year ended December 31, 2011. The decrease in advertising, promotional and selling expenses per barrel and as a percentage of net revenue are primarily a result of
advertising, promotional and selling expenses increasing at a slower rate than increases in core shipment volume. The Company will invest in advertising and promotional campaigns that it believes are effective, but there is no guarantee that such
investment will generate sales growth.

The Company conducts certain advertising and promotional activities in its wholesalers markets, and
the wholesalers make contributions to the Company for such efforts. These amounts are included in the Companys statement of operations as reductions to advertising, promotional and selling expenses. Historically, contributions from wholesalers
for advertising and promotional activities have amounted to between 2% and 4% of net sales. The Company may adjust its promotional efforts in the wholesalers markets, if changes occur in these promotional contribution arrangements, depending
on the industry and market conditions.

General and administrative. General and administrative expenses
increased by $6.7 million, or 15.4%, to $50.2 million in 2012 as compared to 2011, driven by increases in salary and benefit costs and Alchemy & Science startup costs.

Impairment of long-lived assets. During 2012, the Company incurred impairment charges of $149,000 based upon its review of the carrying values of its property, plant and
equipment, compared to $666,000 of impairment charges in 2011.

Stock-based compensation expense. For the year
ended December 29, 2012, an aggregate of $6.5 million in stock-based compensation expense is included in advertising, promotional and selling expenses and general and administrative expenses. Stock compensation increased by $0.3 million in 2012
compared to 2011, primarily due to increased fair value of options and awards granted during 2012.

Provision for income
taxes.The Companys effective income tax rate for the year ended December 29, 2012 increased to 37.7% from the 2011 rate of 36.2%. This increase in the
effective tax rate is primarily due to the favorable state tax settlement in 2011 and higher pre-tax income in 2011 with no corresponding increase in non-deductible expenses .

Year Ended December 31, 2011 (53 weeks) Compared to Year Ended December 25, 2010 (52 weeks)

Net revenue. Net revenue increased by $49.2 million, or 10.6%, to $513.0 million for the year ended December 31, 2011, from $463.8 million for the year ended
December 25, 2010. This increase was due primarily to an increase in core brand shipment volume and minor pricing gains, partially offset by an increase in stale beer returns.

Volume.Total shipment volume increased by 9.3% to 2,484,000 barrels for the year ended
December 31, 2011, as compared to 2,272,000 barrels for the year ended December 25, 2010, due to an increase in core brand shipments. Shipment volume for the core brands increased by 9.4% to 2,471,000 barrels, due primarily to increases in
Samuel Adams Seasonals, the Twisted Tea brand family, the Samuel Adams Brewmasters Collection and Samuel Adams Boston Lager, only partially offset by a decrease in shipments of Sam Adams Light®.

Fiscal
year shipments volume increases of 9.3% were higher than calendar year depletions increases of approximately 7.3% primarily due to the additional week in the fiscal calendar and a planned earlier launch of our Spring Seasonal which resulted in
Spring Seasonal shipments at the end of 2011 being significantly higher than in 2010. On a calendar year basis, the Companys shipments and depletion growth was equivalent at 7% for the full year.

The Company believes wholesaler inventory levels at December 31, 2011 were at appropriate levels. Excluding the impact of the inventory build for
the planned earlier launch of our Spring Seasonal, inventory at participating wholesalers as a result of the Freshest Beer Program was lower by an estimated 133,000 cases as of the end of the fourth quarter, reducing reported earnings per diluted
share by approximately $0.05 for the year.

Net selling price. The net selling price per barrel for core brands
increased by 1.19% to $207.26 per barrel for the year ended December 31, 2011, as compared to $204.83 for the same period last year. This increase in net selling price per barrel is primarily due to price increases taken in 2011, offset by
product mix changes. The percentage of bottles and cans to total shipments increased by 1% point to 73% of total shipments for the year ended December 31, 2011 as compared to 2010.

Gross profit. Gross profit for core brands was $115.08 per barrel for the year
ended December 31, 2011, as compared to $113.24 for the year ended December 25, 2010. Gross margin for core brands was 55.5% for the year ended December 31, 2011, as compared to 55.3% for the year ended December 25, 2010. The
increase in gross profit per barrel of $1.84 and gross margin of 0.2 percentage points is primarily due to increases in the net selling price per barrel, partially offset by increases in cost of goods sold per barrel.

Cost of goods sold for core brands was $92.18 per barrel, or 44.5% as a percentage of net revenue, for the year ended December 31, 2011, as compared
to $91.58 per barrel, or 44.7% as a percentage of net revenue, for the year ended December 25, 2010. The 2011 increase in cost of goods sold of $0.60 per barrel primarily reflected unfavorable package mix and increased inventory obsolescence,
partially offset by decreased ingredient pricing.

Advertising, promotional and selling. Advertising,
promotional and selling expenses increased by $21.6 million, or 15.9%, to $157.3 million for the year ended December 31, 2011, as compared to $135.7 million for the year ended December 25, 2010. The increase is primarily due to increased
size of the sales force and increased salaries, benefits and operating costs of $5.6 million, increased local marketing of $4.1 million, increased advertising of $2.3 million, as well as increased freight expenses to wholesalers of $7.0 million.

Such expenses for core brands were 30.7% of net revenue, or $63.64 per barrel, for the year ended December 31, 2011, as compared to
29.3% of net revenue, or $60.09 per barrel, for the year ended December 25, 2010. The increase in advertising, promotional and selling expenses per barrel and as a percentage of net revenue are a result of advertising, promotional and selling
expenses increasing at a higher rate than increases in core shipment volume. The Company will invest in advertising and promotional campaigns that it believes are effective, but there is no guarantee that such investment will generate sales growth.

General and administrative. General and administrative expenses increased by $4.4 million, or 11.2%, to $43.5
million in 2011 as compared to 2010, driven by increases in salary and benefit costs and consulting expenses, and the fact that in the first quarter of 2010 there was a $0.9 million reversal of a 2009 expense for an option that did not vest.

Impairment of long-lived assets. During 2011, the Company incurred impairment charges of $666,000 based upon
its review of the carrying values of its property, plant and equipment, primarily reflecting the effect of the general decline in economic conditions on the value of certain land owned by the Company, compared to $300,000 of impairment charges in
2010.

Settlement proceeds. As noted in Footnote K  Product Recall of the accompanying
consolidated financial statements, the Company received proceeds of $20.5 million during the second quarter of 2011, pursuant to an agreement to settle all claims regarding the 2008 product recall.

Stock-based compensation expense. For the year ended December 31, 2011, an aggregate of $6.2 million in stock-based
compensation expense is included in advertising, promotional and selling expenses and general and administrative expenses. Stock compensation increased by $3.1 million in 2011 compared to 2010, primarily due to 2011 grants of long-term retention
stock options, increased fair value of options and awards granted during 2011, expense for the estimated achievement of performance-based options and the fact that in the first quarter of 2010 there was a $0.9 million reversal of a 2009 expense for
a performance option that did not vest.

Provision for income
taxes.The Companys effective income tax rate for the year ended December 31, 2011 decreased to 36.2% from the 2010 rate of 38.2%. This decrease in the effective
tax rate is a result of a favorable state tax settlement, as well as higher pretax income but with no corresponding increase in non-deductible expenses, partially offset by smaller research and development tax credits in 2011 as compared to
2010.

Cash increased to $74.5 million as of December 29, 2012 from $49.5 million as of December 31, 2011, primarily due to increased cash flows from operating activities, which was mostly offset by
purchases of property plant and equipment totaling $66.0 million and stock repurchases of $18.0 million.

Cash provided by operating
activities consist of net income, adjusted for certain non-cash items, such as depreciation and amortization, stock-based compensation expense and related excess tax benefit, and other non-cash items included in operating results. Also affecting
cash flows provided by operating activities are changes in operating assets and liabilities, such as accounts receivable, inventory, accounts payable and accrued expenses.

Cash provided by operating activities in 2012 totaled $95.3 million and primarily consisted of net income of $59.5 million, and non-cash items of $21.2 million, and a net decrease in operating assets and
liabilities of $14.7 million. Cash provided by operating activities in 2011 of $72.8 million and primarily consisted of net income of $66.1 million, which includes the $20.5 million in settlement proceeds noted in Footnote K 
Product Recall, and non-cash items of $19.9 million, partially offset by a net increase in operating assets and liabilities of $13.2 million.

The Company used $67.3 million in investing activities during 2012, as compared to $19.6 million during 2011. Investing activities primarily consisted of discretionary equipment purchases to upgrade the
Company-owned breweries.

Cash used in financing activities was $3.0 million during 2012, as compared to $52.7 million during 2011. The $49.7
million change in financing cash flow is primarily due to a decrease in stock repurchases under the Companys Stock Repurchase Program.

During the year ended December 29, 2012, the Company repurchased approximately 165,000 shares of its Class A Common Stock for a total cost of
approximately $18.0 million. On October 1, 2012, the Board of Directors of the Company increased the aggregate expenditure limit for the Companys Stock Repurchase Program by $25.0 million, thereby increasing the limit from $275.0 million
to $300.0 million. As of December 29, 2012, the Company has repurchased a cumulative total of approximately 10.7 million shares of its Class A Common Stock for an aggregate purchase price of approximately $269.9 million.

From December 30, 2012 to February 15, 2013, the Company repurchased 82,000 additional shares of its Class A Common Stock for a total cost
of $11.5 million. As of February 15, 2013, the Company has repurchased a cumulative total of approximately 10.8 million shares of its Class A Common Stock for an aggregate purchase price of $281.5 million. The Company has approximately
$18.5 million remaining on the $300 million share buyback expenditure limit set by the Board of Directors.

The Company expects that its cash
balances as of December 29, 2012 of $74.5 million, along with future operating cash flow and the Companys unused line of credit of $50.0 million, will be sufficient to fund future cash requirements. The Companys $50.0 million credit
facility has a term not scheduled to expire until March 31, 2015. The Company was not in violation of any of its covenants to the lender under the credit facility and there were no amounts outstanding under the credit facility as of the date of
this filing.

Critical Accounting Policies

The discussion and analysis of the Companys financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these financial statements requires the Company to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. The more

judgmental estimates are summarized below. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other
assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from the Companys estimates if past experience or other assumptions do not turn out to be substantially accurate.

Provision for Excess or Expired Inventory

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market value. The Company enters into multi-year purchase commitments in order to secure adequate supply of
ingredients, principally hops, to brew its products. Inventory on hand and under purchase commitments totaled approximately $108.1 million at December 29, 2012. The Companys provisions for excess or expired inventory are based on
managements estimates of forecasted usage of inventories on hand and under contract. Forecasting usage involves significant judgments regarding future demand for the Companys various existing products and products under development as
well as the potency and shelf-life of various ingredients. A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in recording additional provisions for excess or expired inventory in
the future. Provisions for excess inventory are recorded as a cost of goods sold and have historically been adequate to provide for losses on its raw materials.

Valuation of Long-Lived Assets

The Companys long-lived assets include
property, plant and equipment which are depreciated over their estimated useful lives. The carrying value of property, plant and equipment, net of accumulated depreciation, at December 29, 2012 was $189.9 million. For purposes of determining
whether there are any impairment losses, management has historically examined the carrying value of the Companys identifiable long-lived assets, including their useful lives, when indicators of impairment are present. Evaluations of whether
indicators of impairment exist involve judgments regarding the current and future business environment and the length of time the Company intends to use the asset. For all long-lived assets, if an impairment loss is identified based on the fair
value of the asset, as compared to the carrying value of the asset, such loss would be charged to expense in the period the impairment is identified. Estimating the amount of impairment, if any, requires significant judgments including
identification of potential impairments, market comparison to similar assets, estimated cash flows to be generated by the asset, discount rates, and the remaining useful life of the asset.

Revenue Recognition

Net revenue includes product sales, less customer programs and
incentives, reserves for stale beer returns and excise taxes. The Company recognizes revenue on product sales at the time when the product is shipped and the following conditions are met: persuasive evidence of an arrangement exists, title has
passed to the customer according to the shipping terms, the price is fixed and determinable, and collection of the sales proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all
conditions are met.

The Company is committed to maintaining the freshness of the product in the market. In certain circumstances and with the
Companys approval, the Company accepts and destroys stale beer that is returned by distributors. The Company credits approximately fifty percent of the distributors cost of the beer that has passed its expiration date for freshness when
it is returned to the Company or destroyed. The Company reduces revenue and establishes an accrual based upon both historical returns and knowledge of specific return transactions. Estimating this reserve involves significant judgments and
estimates, including comparability of historical return trends to future trends, lag time from date of sale to date of return, and product mix of returns. Historically, the cost of actual stale beer returns has been in line with established
reserves, however, the cost could differ materially from the estimated accrual which would impact revenue.

Customer programs and incentives, which include customer promotional discount programs and customer incentives, are a common practice in the alcohol beverage industry. The Company incurs customer program
costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses in accordance with
ASC Topic 605-50, Revenue RecognitionCustomer Payments and Incentives, based on the nature of the expenditure. Amounts paid to customers totaled $28.1 million, $26.5 million and $26.0 million in fiscal year 2012, 2011 and 2010,
respectively.

The Company enters into customer promotional discount programs with its various wholesalers for certain periods of time.
Amounts paid to wholesalers in connection with these programs in fiscal years 2012, 2011 and 2010 were $19.5 million, $18.8 million, and $18.8 million, respectively. The reimbursements for discounts to wholesalers are recorded as reductions to net
revenue. The agreed-upon discount rates are applied to certain Wholesalers sales to retailers, based on volume metrics, in order to determine the total discounted amount. The computation of the discount allowance requires that management make
certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recorded. Actual promotional discounts owed and paid have historically been in line with allowances recorded by the Company, however, the amounts could
differ from the estimated allowance. The Company has customer incentive arrangements primarily with its wholesalers based upon performance of certain marketing and advertising activities by the wholesalers. Depending on applicable state laws and
regulations, these activities promoting the Companys products may include, but are not limited to point-of-sale and merchandise placement, samples, product displays, promotional programs at retail locations and meals, travel and entertainment.
Amounts paid to customers primarily for customer incentives were $8.6 million, $7.7 million and $7.2 million in fiscal years 2012, 2011 and 2010, respectively. Prior to 2012, these customer incentives were recorded in advertising, promotional and
selling expenses. During 2012, the Company began recording certain of these costs in the total amount of $6.3 million as reductions to net revenue rather than in advertising, promotional and selling expenses. Costs recognized in net revenues
include, but are not limited to, promotional discounts, sales incentives and certain other promotional activities. Costs typically recognized in advertising, promotional and selling expenses include point of sale materials, samples and media
advertising expenditures in local markets. These costs are recorded as incurred, generally when invoices are received; however certain estimates are required at period end. Estimates are based on historical and projected experience for each type of
program or customer and have historically been in line with actual costs incurred.

In connection with its preparation of financial statements
and other financial reporting, management is required to make certain estimates and assumptions regarding the amount and timing of expenditures resulting from these activities. Actual expenditures incurred could differ from managements
estimates and assumptions.

Kegs and Pallets Inventory and Refundable Deposits

The Company distributes its draft beer in kegs and packaged beer primarily in glass bottles and such kegs and bottles are shipped on pallets to
wholesalers. Deposits held by the Company at December 29, 2012 totaled approximately $15.8 million. All kegs and pallets are owned by the Company. Upon shipment of beer to wholesalers, the Company collects a refundable deposit on the kegs and
pallets. The Company has experienced some loss of kegs and pallets and anticipates that some loss will occur in future periods. The Company believes that the loss of kegs and pallets, after considering the forfeiture of related deposits, has not
been material to the financial statements. The Company uses internal records, records maintained by wholesalers, records maintained by other third party vendors and historical information to estimate the physical count of kegs and pallets held by
wholesalers. These estimates affect the amount recorded as property, plant and equipment and current liabilities as of the date of the financial statements. The actual liability for refundable deposits could differ from these estimates.

The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of Accounting Standards Codification Topic 718, Compensation  Stock Compensation.
Stock-based compensation was $6.5 million, $6.2 million, and $3.1 million in fiscal years 2012, 2011, and 2010, respectively. Various option-pricing models are used to calculate the fair value of options. All option-pricing models require the input
of subjective assumptions. These assumptions include the estimated volatility of the Companys common stock price over the expected term, the expected dividend rate, the estimated post-vesting forfeiture rate and expected exercise behavior.

In addition, an estimated pre-vesting forfeiture rate is applied in the recognition of the compensation charge. Periodically, the Company
grants performance-based stock options, related to which it only recognizes compensation expense if it is probable that performance targets will be met. Consequently, at the end of each reporting period, the Company estimates whether it is probable
that performance targets will be met. Changes in the subjective assumptions and estimates can materially affect the amount of stock-based compensation expense recognized in the consolidated statements of income.

Income Taxes

Income tax expense
was $36.0 million, $37.4 million and $31.0 million in fiscal years 2012, 2011, and 2010, respectively. The Company provides for deferred taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in the Companys consolidated financial statements or tax returns. This results in differences between the book and tax basis of the Companys assets, liabilities
and carry-forwards such as tax credits. In estimating future tax consequences, all expected future events, other than enactment of changes in the tax laws or rates, are generally considered. Valuation allowances are provided to the extent deemed
necessary when realization of deferred tax assets appears unlikely.

The calculation of the Companys tax liabilities involves dealing
with uncertainties in the application of complex tax regulations in several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the
timing and amount of deductions and the allocation of income among various tax jurisdictions. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns. Historically, the valuation
allowances and reserves for uncertain tax positions have been adequate to cover the related tax exposures.

Business Environment

The alcoholic beverage industry is highly regulated at the federal, state and local levels. The TTB and the Justice Departments
Bureau of Alcohol, Tobacco, Firearms and Explosives enforce laws under the Federal Alcohol Administration Act. The TTB is responsible for administering and enforcing excise tax laws that directly affect the Companys results of operations.
State and regulatory authorities have the ability to suspend or revoke the Companys licenses and permits or impose substantial fines for violations. The Company has established strict policies, procedures and guidelines in efforts to ensure
compliance with all applicable state and federal laws. However, the loss or revocation of any existing license or permit could have a material adverse effect on the Companys business, results of operations, cash flows and financial position.

The Better Beer category is highly competitive due to the large number of regional craft and specialty brewers and the brewers of imported
beers who distribute similar products that have similar pricing and target drinkers. The Company believes that its pricing is appropriate given the quality and reputation of its core brands, while realizing that economic pricing pressures may affect
future pricing levels. Certain major domestic brewers have also developed niche brands to compete within the Better Beer, FMB and cider categories and have acquired interests in craft beers and cider makers, or importation rights to foreign brands.
Import brewers and major domestic brewers are able to compete more aggressively than the Company, as they have substantially greater

resources, marketing strength and distribution networks than the Company. The Company anticipates craft beer competition increasing as craft brewers have benefited from a couple of years of
healthy growth and are looking to maintain these trends. The Company also increasingly competes with wine and spirits companies, some of which have significantly greater resources than the Company. This competitive environment may affect the
Companys overall performance within the Better Beer category. As the market matures and the Better Beer category continues to consolidate, the Company believes that companies that are well-positioned in terms of brand equity, marketing and
distribution will have greater success than those who do not. With approximately 340 distributors nationwide and the Companys sales force of approximately 330 people, a commitment to maintaining brand equity and the quality of its beer, the
Company believes it is well positioned to compete in a maturing market.

The demand for the Companys products is also subject to changes
in drinkers tastes.

The Potential Impact of Known Facts, Commitments, Events and Uncertainties

Hops Purchase Commitments

The
Company utilizes several varieties of hops in the production of its products. To ensure adequate supplies of these varieties, the Company enters into advance multi-year purchase commitments based on forecasted future hop requirements, among other
factors.

During 2012, the Company entered into several hops future contracts in the normal course of business. The total value of the
contracts entered into as of December 29, 2012, which are denominated in Euros, British Pounds Sterling and U.S. Dollars, was $29.7 million. The Company has no forward exchange contracts in place as of December 29, 2012 and currently
intends to purchase future hops using the exchange rate at the time of purchase. These contracts were deemed necessary in order to bring hop inventory levels and purchase commitments into balance with the Companys current brewing volume and
hop usage forecasts. In addition, these contracts enable the Company to secure its position for future supply with hop vendors in the face of some competitive buying activity.

The Companys accounting policy for hop inventory and purchase commitments is to recognize a loss by establishing a reserve for aged hops and to the extent inventory levels and commitments exceed
forecasted needs as determined by the Companys brewing department. The computation of the excess inventory requires management to make certain assumptions regarding future sales growth, product mix, cancellation costs and supply, among others.
Actual results may differ materially from managements estimates. The Company continues to manage inventory levels and purchase commitments in an effort to maximize utilization of hops on hand and hops under commitment. However, changes in
managements assumptions regarding future sales growth, product mix and hops market conditions could result in future material losses.

Contractual Obligations

The
following table presents contractual obligations as of December 29, 2012:

The Company had outstanding total non-cancelable purchase commitments of $116.3 million at December 29,
2012. These commitments are made up of hops and barley of $40.1 million, equipment and machinery of $25.6 million, glass bottles of $15.4 million, advertising contracts of $14.7 million, operating leases of $9.3 million, and other commitments of
$11.0 million.

The Company has entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend
through crop year 2016 and specify both the quantities and prices, mostly denominated in Euros, to which the Company is committed. Hops purchase commitments outstanding at December 29, 2012 totaled $29.7 million, based on the exchange
rates on that date.

Currently, the Company has entered into contracts for barley, wheat, and malt with two major suppliers. The contracts
include crop year 2012 and covers a portion of the Companys barley and wheat requirements for 2013. Barley, wheat, and malt purchase commitments outstanding at December 29, 2012 totaled $10.4 million.

The Company sources glass bottles pursuant to a Glass Bottle Supply Agreement with Anchor Glass Container Corporation (Anchor) under which
Anchor is the exclusive supplier of certain glass bottles for the Cincinnati Brewery and the Pennsylvania Brewery. This agreement also establishes the terms on which Anchor may supply glass bottles to other breweries where the Company brews its
beers. Under the Anchor agreement, the Company has minimum and maximum purchase commitments that are based on Company-provided production estimates which, under normal business conditions, are expected to be fulfilled. Minimum purchase commitments
under this agreement, assuming Anchor is unable to replace lost production capacity cancelled by the Company, as of December 29, 2012 totaled $15.4 million.

The Company has various operating lease agreements in place for facilities and equipment as of December 29, 2012. Terms of these leases include, in some instances, scheduled rent increases, renewals,
purchase options and maintenance costs, and vary by lease. These lease obligations expire at various dates through 2021.

For the fiscal year
ended December 29, 2012, the Company brewed most all of its volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies.
Pursuant to these arrangements, the Company purchases the liquid produced by those brewing companies, including the raw materials that are used in the liquid, at the time such liquid goes into fermentation. The Company is required to repurchase all
unused raw materials purchased by the brewing company specifically for the Companys beers at the brewing companys cost upon termination of the production arrangement. The Company is also obligated to meet annual volume requirements in
conjunction with certain production arrangements, which are not material to the Companys operations.

The Companys arrangements
with other brewing companies require it to periodically purchase equipment in support of brewery operations. As of December 29, 2012, there were no significant equipment purchase requirements outstanding under existing contracts. Changes to the
Companys brewing strategy or existing production arrangements, new production relationships or the introduction of new products in the future may require the Company to purchase equipment to support the contract breweries operations.

Recent Accounting Pronouncements

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles-Goodwill and Other (Topic 350)-Testing Indefinite-Lived Intangible Assets for Impairment (ASU
2012-02), to allow entities to use a qualitative approach to test indefinite-lived intangible assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that
the fair value of an indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed quantitative impairment test by comparing the fair value of the
indefinite-lived intangible asset with its carrying value. Otherwise, the quantitative impairment test is not

required. ASU 2012-02 is effective for fiscal years beginning after September 15, 2012. As permitted by ASU 2012-02, the Company early adopted this statement in 2012, which did not have a
material impact on its financial statements.

Off-Balance Sheet Arrangements

The Company has not entered into any material off-balance sheet arrangements as of December 29, 2012.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, the Company is exposed to the impact of fluctuations in foreign exchange rates. The Company does not enter into derivatives or other market risk sensitive instruments
for the purpose of speculation or for trading purposes. Market risk sensitive instruments include derivative financial instruments, other financial instruments and derivative commodity instruments, such as futures, forwards, swaps and options, that
are exposed to rate or price changes.

The Company enters into hops purchase contracts in foreign denominated currencies, as described above
under Hops Purchase Commitments. The cost of these hops commitments changes as foreign exchange rates fluctuate. Currently, it is not the Companys policy to hedge against foreign currency fluctuations.

The interest rate for borrowings under the Companys credit facility is based on either (i) the Alternative Prime Rate (3.25% at
December 29, 2012) or (ii) the applicable LIBOR rate (0.21% at December 29, 2012) plus 0.45%, and therefore, subjects the Company to fluctuations in such rates. As of December 29, 2012, the Company had no amounts outstanding
under its current line of credit.

Sensitivity Analysis

The Company applies a sensitivity analysis to reflect the impact of a 10% hypothetical adverse change in the foreign currency rates. A potential adverse fluctuation in foreign currency exchange rates
could negatively impact future cash flows by approximately $4.0 million as of December 29, 2012.

There are many economic factors that
can affect volatility in foreign exchange rates. As such factors cannot be predicted, the actual impact on earnings due to an adverse change in the respective rates could vary substantially from the amounts calculated above.

The
Board of Directors and Stockholders of The Boston Beer Company, Inc.

We have audited the accompanying consolidated balance sheets of The
Boston Beer Company, Inc. and subsidiaries as of December 29, 2012 and December 31, 2011, and the related consolidated statements of income and comprehensive income, stockholders equity, and cash flows for each of the three years in
the period ended December 29, 2012. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of The Boston Beer Company, Inc. and subsidiaries at December 29, 2012 and December 31, 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 29,
2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), The Boston Beer Company, Inc. and subsidiaries internal control over financial reporting as of December 29, 2012, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2013 expressed an unqualified opinion thereon.

The Boston Beer Company, Inc. and subsidiaries (the Company) are engaged in the business of selling
alcohol beverages throughout the United States and in selected international markets, under the trade names The Boston Beer Company, Twisted Tea Brewing Company, and Angry Orchard Cider Company. The Companys
Samuel Adams® beers and Sam Adams Light® are produced and sold under the trade name The Boston Beer Company. A&S Brewing Collaborative LLC, d/b/a Alchemy & Science
(A&S), a wholly-owned subsidiary of the Company, produces and sells beer under the trade names The Traveler Beer Co. (formerly House of Shandy) and Angel City Brewing Company.

B.

Summary of Significant Accounting Policies

Fiscal Year

The Companys fiscal year is a fifty-two or fifty-three week period ending on the last Saturday in December. The fiscal period of 2012 consists of
fifty-two weeks, fiscal period of 2011 consists of fifty-three weeks, and fiscal period of 2010 consist of fifty-two weeks.

Principles
of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of
which are wholly-owned. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting

The Company consists of two operating segments that each produce and sell alcohol beverages. The first operating
segment is comprised of the Companys Samuel Adams®, Sam Adams Light®, Twisted Tea® and Angry Orchard® brands.
The second segment is the A&S Brewing Collaborative which is comprised of The Traveler Beer Company and Angel City Brewing Company. Both segments have similar economic characteristics. They also sell predominantly low alcohol beverages, which
are sold to the same types of customers in similar size quantities, at similar price points and through substantially the same channels of distribution. These beverages are manufactured using similar production processes, have comparable alcohol
content and generally fall under the same regulatory environment. Since the operating segments are similar in the areas outlined above, they are aggregated for financial statements purposes.

Use of Estimates

The preparation of the consolidated financial statements in
conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents at December 29, 2012 and
December 31, 2011 included cash on-hand and money market instruments that are highly liquid investments.

Accounts Receivable and
Allowance for Doubtful Accounts

The Companys accounts receivable primarily consist of trade receivables. The Company records an
allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging

of the accounts receivable balances combined with managements estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a
receivable have failed. The Company believes its allowance for doubtful accounts as of December 29, 2012 and December 31, 2011 are adequate, but actual write-offs could exceed the recorded allowance.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and trade receivables.
The Company places its cash equivalents with high credit quality financial institutions. As of December 29, 2012, the Companys cash and cash equivalents were invested in investment-grade, highly-liquid U.S. government agency corporate
money market accounts.

The Company sells primarily to independent beer distributors across the United States and Canada. Sales to
non-Canadian foreign customers are insignificant. Receivables arising from these sales are not collateralized; however, credit risk is minimized as a result of the large and diverse nature of the Companys customer base. The Company establishes
an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. There were no individual customer accounts receivable balances outstanding at December 29, 2012
and December 31, 2011 that were in excess of 10% of the gross accounts receivable balance on those dates. No individual customers represented more than 10% of the Companys revenues during fiscal years 2012, 2011 and 2010.

Financial Instruments and Fair Value of Financial Instruments

The Companys primary financial instruments consisted of cash equivalents, accounts receivable, accounts payable and accrued expenses at December 29, 2012 and December 31, 2011. The Company
determines the fair value of its financial assets and liabilities in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures
(ASC 820). The Company believes that the carrying amount of its cash, accounts receivable, accounts payable and accrued expenses approximates fair value due to the short-term nature of these assets and liabilities. The Company is not
exposed to significant interest, currency or credit risks arising from these financial assets and liabilities.

Inventories and
Provision for Excess or Expired Inventory

Inventories consist of raw materials, work in process and finished goods. Raw materials,
which principally consist of hops, other brewing materials and packaging, are stated at the lower of cost (first-in, first-out basis) or market value. The cost elements of work in process and finished goods inventory consist of raw materials, direct
labor and manufacturing overhead. Packaging design costs are expensed as incurred.

The provisions for excess or expired inventory are based
on managements estimates of forecasted usage of inventories on hand and under contract. A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in recording additional provisions
for excess or expired inventory in the future. Provisions for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on its raw materials.

The computation of the excess hops inventory requires management to make certain assumptions regarding future sales growth, product mix, new products,
cancellation costs, and supply, among others. The Company manages inventory levels and purchase commitments in an effort to maximize utilization of hops on hand and hops under commitment. The Companys accounting policy for hops inventory and
purchase commitments is to recognize a loss by establishing a reserve to the extent inventory levels and commitments exceed managements expected future usage.

Property, plant, and equipment are stated at cost. Expenditures for repairs and maintenance are expensed as incurred. Major renewals and betterments that extend the life of the property are capitalized.
Some of the Companys equipment is used by other brewing companies to produce the Companys products under brewing service arrangements (Note J). Depreciation is computed using the straight-line method based upon the estimated useful lives
of the underlying assets as follows:

Kegs

5 years

Office equipment and furniture

3 to 5 years

Machinery and plant equipment

3 to 20 years, or the term of the production agreement, whichever is shorter

Leasehold improvements

Lesser of the remaining term of the lease or estimated useful life of the asset

Building and building improvements

15 to 20 years, or the remaining useful life of the building, whichever is shorter

Refundable Deposits on Kegs and Pallets

The Company distributes its draft beer in kegs and packaged beer primarily in glass bottles and such kegs and bottles are shipped on pallets to wholesalers. All kegs and pallets are owned by the Company.
Kegs are reflected in the Companys balance sheets at cost and are depreciated over the estimated useful life of the keg, while pallets are expensed upon purchase. Upon shipment of beer to wholesalers, the Company collects a refundable deposit
on the kegs and pallets, which is included in current liabilities in the Companys balance sheets. Upon return of the kegs and pallets to the Company, the deposit is refunded to the wholesaler.

The Company has experienced some loss of kegs and pallets and anticipates that some loss will occur in future periods due to the significant volume of
kegs and pallets handled by each wholesaler and retailer, the homogeneous nature of kegs and pallets owned by most brewers and the relatively small deposit collected for each keg when compared with its market value. The Company believes that this is
an industry-wide issue and that the Companys loss experience is not atypical. The Company believes that the loss of kegs and pallets, after considering the forfeiture of related deposits, has not been material to the financial statements. In
2010, the Company began estimating the physical count of kegs and pallets held by certain of its larger wholesalers and the forfeited deposits attributable to lost kegs and pallets. The Company uses internal records, records maintained by
wholesalers, records maintained by other third party vendors and historical information to estimate the physical count of kegs and pallets held by wholesalers. These estimates affect the amount recorded as property, plant and equipment and current
liabilities as of the date of the financial statements. The actual liability for refundable deposits could differ from these estimates. For the year ended December 29, 2012, the Company decreased its liability for refundable deposits, gross
property, plant and equipment and related accumulated depreciation by $287,000, $1.1 million and $1.1 million, respectively. For the year ended December 31, 2011, the Company decreased its liability for refundable deposits, gross property,
plant and equipment and related accumulated depreciation by $1.9 million, $4.6 million and $4.6 million, respectively. As of December 29, 2012 and December 31, 2011, the Companys balance sheet includes $14.2 million and $12.6
million, respectively, in refundable deposits on kegs and pallets and $9.8 million and $10.8 million, respectively, in keg equipment, net of accumulated depreciation.

Goodwill is comprised of two items. It represents the excess of the purchase price of the Company-owned brewery in Cincinnati, Ohio (the Cincinnati Brewery) over the fair value of the net
assets acquired upon the completion of the acquisition in November 2000. During the first quarter of 2012, the Company acquired substantially all of the assets of Southern California Brewing Company, Inc., d/b/a Angel City Brewing Company and the
excess of the purchase price over the fair value of assets was allocated to goodwill. The Company does not amortize goodwill, but performs an annual impairment analysis of goodwill by comparing the carrying value and the fair value of its two
reporting units at the end of the third quarter of every fiscal year. The Company has concluded that its goodwill was not impaired as of December 29, 2012 and December 31, 2011.

Long-lived Assets

Long-lived assets are recorded at cost and depreciated over their
estimated useful lives. For purposes of determining whether there are any impairment losses, as further discussed below, management has historically examined the carrying value of the Companys identifiable long-lived assets, including their
useful lives, when indicators of impairment are present. For all long-lived assets, if an impairment loss is identified based on the fair value of the asset, as compared to the carrying value of the asset, such a loss would be charged to expense in
the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated useful lives are more appropriate. In that
event, the Company will be required to record additional depreciation in future periods, which will reduce earnings.

Factors generally
considered important which could trigger an impairment review on the carrying value of long-lived assets include the following: (1) significant underperformance relative to historical or projected future operating results; (2) significant
changes in the manner of use of acquired assets or the strategy for the Companys overall business; (3) underutilization of assets; and (4) discontinuance of products by the Company or its customers. The Company believes that the
carrying value of its long-lived assets was realizable as of December 29, 2012 and December 31, 2011.

Income Taxes

The Company provides for deferred taxes using an asset and liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been recognized in the Companys consolidated financial statements or tax returns. This results in differences between the book and tax bases of the Companys assets
and liabilities and carryforwards, such as tax credits. In estimating future tax consequences, all expected future events, other than enactment of changes in the tax laws or rates, are generally considered. Valuation allowances are provided to the
extent deemed necessary when realization of deferred tax assets appears unlikely.

The calculation of the Companys tax liabilities
involves dealing with uncertainties in the application of complex tax regulations in several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include
inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In accordance with ASC Topic 740, Income Taxes, the Company records estimated reserves for exposures associated with
positions that it takes on its income tax returns in accordance with that standard.

The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department (the TTB) regulations which includes making timely and accurate
excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on
its understanding of the applicable excise tax laws.

Revenue Recognition

Net revenue includes product sales, less the distributor promotional discount allowance, certain wholesaler incentives, as discussed below in Wholesaler
Incentives, the stale beer accrual and excise taxes. The Company recognizes revenue on product sales at the time when the product is shipped and the following conditions are met: persuasive evidence of an arrangement exists, title has passed to the
customer according to the shipping terms, the price is fixed and determinable, and collection of the sales proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are
met. As of December 29, 2012, the Company has deferred $3.6 million in revenue related to product shipped prior to December 29, 2012. As December 31, 2011, the Company has deferred $1.7 million in revenue related to product shipped
prior to December 31, 2011. These amounts are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

In certain circumstances and with the Companys approval, the Company accepts and destroys stale beer that is returned by distributors. The Company credits approximately fifty percent of the
distributors cost of the beer that has passed its expiration date for freshness when it is returned to the Company or destroyed. The Company reduces revenue and establishes an accrual based upon both historical returns, which is applied to an
estimated lag time for receipt of product, and knowledge of specific return transactions. Stale beer expense is reflected in the accompanying financial statements as a reduction of revenue; however, the actual stale beer expense incurred by the
Company could differ from the estimated accrual.

Cost of Goods Sold

The following expenses are included in cost of goods sold: raw material costs, packaging costs, costs and income related to deposit activity, purchasing and receiving costs, manufacturing labor and
overhead, brewing and processing costs, inspection costs relating to quality control, inbound freight charges, depreciation expense related to manufacturing equipment and warehousing costs, which include rent, labor and overhead costs.

Shipping Costs

Costs incurred
for the shipping of products to customers are included in advertising, promotional and selling expenses in the accompanying consolidated statements of income. The Company incurred shipping costs of $36.3 million, $31.1 million and $24.1 million in
fiscal years 2012, 2011 and 2010, respectively.

Advertising and Sales Promotions

The following expenses are included in advertising, promotional and selling expenses in the accompanying consolidated statements of income: media
advertising costs, sales and marketing expenses, salary and benefit expenses and meals, travel and entertainment expenses for the sales and sales support workforce, promotional activity expenses, freight charges related to shipments of finished
goods from manufacturing locations to distributor locations and point-of-sale items. Total advertising and sales promotional expenditures of $78.3 million, $73.4 million and $66.1 million were included in advertising, promotional and selling
expenses in the accompanying consolidated statements of income for fiscal years 2012, 2011 and 2010, respectively.

The Company conducts certain advertising and promotional activities in its wholesalers markets
and the wholesalers make contributions to the Company for such efforts. Reimbursements from wholesalers for advertising and promotional activities are recorded as reductions to advertising, promotional and selling expenses.

Customer Programs and Incentives

Customer programs and incentives, which include customer promotional discount programs and customer incentives, are a common practice in the alcohol
beverage industry. The Company incurs customer program costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as
advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue RecognitionCustomer Payments and Incentives, based on the nature of the expenditure. Amounts paid to customers totaled $28.1 million, $26.5
million and $26.0 million in fiscal year 2012, 2011 and 2010, respectively.

The Company enters into customer promotional discount programs
with its various wholesalers for certain periods of time. Amounts paid to wholesalers in connection with these programs in fiscal years 2012, 2011 and 2010 were $19.5 million, $18.8 million, and $18.8 million, respectively. The reimbursements for
discounts to wholesalers are recorded as reductions to net revenue. The agreed-upon discount rates are applied to certain wholesalers sales to retailers, based on volume metrics, in order to determine the total discounted amount. The
computation of the discount allowance requires that management make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recorded. Actual promotional discounts owed and paid have historically been in line
with allowances recorded by the Company, however, the amounts could differ from the estimated allowance.

The Company has customer incentive
arrangements primarily with its wholesalers based upon performance of certain marketing and advertising activities by the wholesalers. Depending on applicable state laws and regulations, these activities promoting the Companys products may
include, but are not limited to point-of-sale and merchandise placement, samples, product displays, promotional programs at retail locations and meals, travel and entertainment. Amounts paid to customers primarily for customer incentives were $8.6
million, $7.7 million and $7.2 million in fiscal years 2012, 2011 and 2010, respectively. Prior to 2012, these customer incentives were recorded in advertising, promotional and selling expenses. During 2012, the Company began recording certain of
these costs in the total amount of $6.3 million as reductions to net revenue rather than in advertising, promotional and selling expenses. Costs recognized as reduction to net revenues include, but are not limited to, promotional discounts, sales
incentives and certain other promotional activities. Costs typically recognized in advertising, promotional and selling expenses include point of sale materials, samples and media advertising expenditures in local markets. These costs are recorded
as incurred, generally when invoices are received; however certain estimates are required at period end. Estimates are based on historical and projected experience for each type of program or customer and have historically been in line with actual
costs incurred.

General and Administrative Expenses

The following expenses are included in general and administrative expenses in the accompanying consolidated statements of income: general and administrative salary and benefit expenses, insurance costs,
professional service fees, rent and utility expenses, meals, travel and entertainment expenses for general and administrative employees, and other general and administrative overhead costs.

The Company accounts for share-based awards in accordance with ASC Topic 718, Compensation  Stock Compensation (ASC 718), which generally requires recognition of share-based
compensation costs in financial statements based on fair value. Compensation cost is recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period). The amount of
compensation cost recognized in the consolidated statements of income is based on the awards ultimately expected to vest, and therefore, reduced for estimated forfeitures.

As permitted by ASC 718, the Company elected to use a lattice model, such as the binomial option-pricing model, to estimate the fair values of stock options, with the exception of the 2008 stock option
grant to the Companys Chief Executive Officer, which is considered to be a market-based award and was valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair
value based on the most likely outcome. See Note N for further discussion of the application of the option-pricing models.

Net Income
Per Share

Basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted
net income per share is calculated by dividing net income by the weighted-average common shares and potentially dilutive securities outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive.

Reclassifications

Certain amounts in prior periods have been reclassified in order to conform to current presentation.

Environmental Matters

In
accordance with ASC Topic 410, Asset Retirement and Environmental Obligations, the Company accrues for environmental remediation-related activities for which commitments or cleanup plans have been developed and for which costs can be
reasonably estimated. All accrued amounts are generally determined on an undiscounted basis.

Recent Accounting Pronouncements

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles-Goodwill and Other (Topic 350)-Testing
Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), to allow entities to use a qualitative approach to test indefinite-lived intangible assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative
assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed
quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying value. Otherwise, the quantitative impairment test is not required. ASU 2012-02 is effective for fiscal years beginning after
September 15, 2012. As permitted by ASU 2012-02, the Company early adopted this statement in 2012, which did not have a material impact on its financial statements.

Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops, other
brewing materials and packaging, are stated at the lower of cost, determined on the first-in, first-out basis, or market. Inventories are generally classified as current assets. The Companys goal is to maintain a supply of approximately two
years for essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply. As of December 29, 2012, the Company has classified approximately $1.5 million of hops inventory in other long term assets that are above
two years forecasted usage. The cost elements of work in process and finished goods inventory consist of raw materials, direct labor and manufacturing overhead. Inventories consisted of the following:

The Company recorded depreciation expense related to these assets of $20.2 million, $18.1 million and
$17.3 million in fiscal years 2012, 2011 and 2010, respectively.

Impairment of Long-lived Assets

During 2012, 2011, and 2010, the Company recorded impairment charges of $0.1 million, $0.7 million, and $0.3 million, respectively, based upon its review
of the carrying values of its property, plant and equipment.

F.

Goodwill

Goodwill represents the excess of the purchase price of the Company-owned breweries over the fair value of the net assets acquired upon
the completion of the acquisitions. During the first quarter of 2012, the Company acquired substantially all of the assets of Southern California Brewing Company, Inc., d/b/a Angel City Brewing Company. A portion of the purchase price was allocated
to goodwill. See Note M for details on this acquisition.

The following table summarizes the Companys changes to the carrying amount of
goodwill for the fifty-two weeks ended December 29, 2012 (in thousands):

Balance
atDecember 31,2011

Additions

Balance atDecember 29,2012

Goodwill, net

$

1,377

$

1,161

$

2,538

G.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

December 29,2012

December 31,2011

(in thousands)

Accrued deposits

$

15,805

$

13,867

Employee wages, benefits and reimbursements

11,701

9,638

Advertising, promotional and selling expenses

8,158

6,788

Income taxes (see Note I)

4,803

3,810

Deferred revenue

4,109

2,316

Accrued excise taxes

2,491

1,721

Environmental remediation costs (see Note J)

1,469

2,589

Other accrued liabilities

11,993

7,514

$

60,529

$

48,243

H.

Debt

Line of Credit

The Company has a credit facility in place that provides for a $50.0 million revolving line of credit which has a term not scheduled to expire until
March 31, 2015. The Company may elect an interest rate for borrowings under the credit facility based on either (i) the Alternative Prime Rate (3.25% at December 29, 2012) or (ii) the applicable LIBOR rate (0.21% at
December 29, 2012) plus 0.45%. The Company incurs an annual commitment fee of 0.15% on the unused portion of the facility and is obligated to meet certain financial covenants, including

the maintenance of specified levels of tangible net worth and net income. The Company was in compliance with all covenants as of December 29, 2012 and December 31, 2011. There were no
borrowings outstanding under the credit facility as of December 29, 2012 and December 31, 2011.

There are also certain restrictive
covenants set forth in the credit agreement. Pursuant to the negative covenants, the Company has agreed that it will not: enter into any indebtedness or guarantees other than those specified by the lender, enter into any sale and leaseback
transactions, merge, consolidate, or dispose of significant assets without the lenders prior written consent, make or maintain any investments other than those permitted in the credit agreement, or enter into any transactions with affiliates
outside of the ordinary course of business. In addition, the credit agreement requires the Company to obtain prior written consent from the lender on distributions on account of, or in repurchase, retirement or purchase of its capital stock or other
equity interests with the exception of the following: (a) distributions of capital stock from subsidiaries to The Boston Beer Company, Inc. and Boston Beer Corporation (a subsidiary of The Boston Beer Company, Inc.), (b) repurchase from
former employees of non-vested investment shares of Class A Common Stock, issued under the Employee Equity Incentive Plan, and (c) redemption of shares of Class A Common Stock as approved by the Board of Directors and payment of cash
dividends to its holders of common stock. Borrowings under the credit facility may be used for working capital, capital expenditures and general corporate purposes of the Company and its subsidiaries. In the event of a default that has not been
cured, the credit facility would terminate and any unpaid principal and accrued interest would become due and payable.

Note Payable

In June 2012, the Company entered into a grant facility with the Commonwealth of Pennsylvania for $770,000. The purpose of the grant
is to provide the Company funds to support economic development through the repaving of a parking lot and loading docks at its Pennsylvania Brewery. Under the terms of the grant, the Company was required to fund this project through a note
arrangement, with the Commonwealth reimbursing the Company for its debt service over a 10-year period.

To fund the project, the Company
entered into a term note arrangement with Bank of America N.A. in June 2012. The note is for approximately $628,000 and has a maturity date of December 31, 2021. The interest rate for the note is fixed at an annual rate of 4.25%. Payments of
$77,000 are due annually beginning on December 31, 2012, which amount will be reimbursed to the Company by the Commonwealth. The note is secured by interest in a CD held by the bank totaling approximately $628,000 which is reduced each year
based on principal payments on the note; this amount is accounted for as restricted cash and is included in other assets on the Companys consolidated balance sheet.

The Companys practice is to classify interest and penalties related to income tax matters in
income tax expense. Interest and penalties included in the provision for income taxes amounted to $0.1 million, $0.4 million and $0.7 million for fiscal years 2012, 2011 and 2010, respectively. Accrued interest and penalties amounted to $0.7 million
and $1.0 million at December 29, 2012 and December 31, 2011, respectively.

A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:

2012

2011

(in thousands)

Balance at beginning of year

$

1,935

$

7,129

Increases related to current year tax positions



175

Decrease Increase related to prior year tax positions

(59

)

(1,808

)

Decreases related to settlements

(323

)

(3,561

)

Decreases related to lapse of statute of limitations

(290

)



Balance at end of year

$

1,263

$

1,935

Included in the balance of unrecognized tax benefits at December 29, 2012 and December 31, 2011 are potential
net benefits of $1.1 million and $1.6 million, respectively, that would favorably impact the effective tax rate if recognized. Unrecognized tax benefits are included in accrued expenses in the accompanying consolidated balance sheets and adjusted in
the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.

The
Companys state income tax returns remain subject to examination for three or four years depending on the states statute of limitations. In addition, the Company is generally obligated to report changes in taxable income arising from
federal income tax audits.

In September 2011, the Internal Revenue Service (IRS) commenced an examination of the
Companys 2007 and 2008 amended consolidated corporate income tax returns and the related loss carry back claim to 2006. In addition, in October 2011, the IRS expanded the original examination to include the 2009 corporate income tax return.
The examination was in progress as of December 29, 2012. The Company is also being audited by two states as of December 29, 2012.

It is reasonably possible that the Companys unrecognized tax benefits may increase or decrease in 2013 if there is a completion of certain income
tax audits; however, the Company cannot estimate the range of such possible changes. The Company does not expect that any potential changes would have a material impact on the Companys financial position, results of operations or cash flows.

J.

Commitments and Contingencies

Purchase Commitments

The Company had outstanding total non-cancelable purchase commitments of $106.8 million at December 29, 2012. These commitments are made up of hops and malt totaling $40.1 million, equipment and
machinery of $25.6 million, glass bottles of $15.4 million, advertising contracts of $14.7 million, and other of $11.0 million.

The Company
has entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2016 and specify both the quantities and prices, mostly denominated in Euros, to which the Company is committed. Hops
purchase commitments outstanding at December 29, 2012 totaled

$29.7 million, based on the exchange rates on that date. The Company does not use forward currency exchange contracts and intends to purchase future hops using the exchange rate at the time
of purchase. As of December 29, 2012, projected cash outflows under hops purchase commitments for each of the remaining years under the contracts are as follows:

(In thousands)

2013

$

18,657

2014

5,933

2015

3,444

2016

1,632

2017



$

29,666

Currently, the Company has entered into contracts for barley, wheat, and malt with two major suppliers. The contracts
include crop year 2012 and covers a portion of the Companys barley and wheat requirements for 2013. Barley, wheat, and malt purchase commitments outstanding at December 29, 2012 totaled $10.4 million.

The Company sources glass bottles pursuant to a Glass Bottle Supply Agreement with Anchor Glass Container Corporation (Anchor) under which
Anchor is the exclusive supplier of certain glass bottles for the Cincinnati Brewery and the Pennsylvania Brewery. This agreement also establishes the terms on which Anchor may supply glass bottles to other breweries where the Company brews its
beers. Under the Anchor agreement, the Company has minimum and maximum purchase commitments that are based on Company-provided production estimates which, under normal business conditions, are expected to be fulfilled. Minimum purchase commitments
under this agreement, assuming Anchor is unable to replace lost production capacity cancelled by the Company, as of December 29, 2012 totaled $15.4 million.

For the fiscal year ended December 29, 2012, the Company brewed most of its volume at Company owned breweries. In the normal course of its business, the Company has historically entered into various
production arrangements with other brewing companies. Pursuant to these arrangements, the Company purchases the liquid produced by those brewing companies, including the raw materials that are used in the liquid, at the time such liquid goes into
fermentation. The Company is required to repurchase all unused raw materials purchased by the brewing company specifically for the Companys beers at the brewing companys cost upon termination of the production arrangement. The Company is
also obligated to meet annual volume requirements in conjunction with certain production arrangements, which are not material to the Companys operations.

The Companys arrangements with other brewing companies require it to periodically purchase equipment in support of brewery operations. As of December 29, 2012, there were no significant
equipment purchase requirements outstanding under existing contracts. Changes to the Companys brewing strategy or existing production arrangements, new production relationships or the introduction of new products in the future may require the
Company to purchase equipment to support the contract breweries operations.

Lease Commitments

The Company has various operating lease agreements in place for facilities and equipment as of December 29, 2012. Terms of these leases include, in
some instances, scheduled rent increases, renewals, purchase options and maintenance costs, and vary by lease. These lease obligations expire at various dates through 2021. Aggregate rent expense was $2.0 million, $1.4 million and $1.3 million in
fiscal years 2012, 2011 and 2010, respectively.

Aggregate minimum annual rental payments under these agreements are as follows:

(In thousands)

2013

$

1,874

2014

1,894

2015

1,705

2016

1,704

2017

650

Thereafter

1,518

$

9,345

Litigation

In 2009, the Company was informed that ownership of the High Falls brewery located in Rochester, New York (the Rochester Brewery) changed and that the new owners would not assume the
Companys existing contract for brewing services at the Rochester Brewery. Brewing of the Companys products at the Rochester Brewery subsequently ceased in April 2009. In February 2010, the Company filed a Demand for Arbitration with the
American Arbitration Association (the arbitration) which, as amended, asserted a breach of contract claim against the previous owner of the Rochester Brewery. In March 2010, the new and previous owners of the Rochester Brewery filed a
complaint in federal court seeking a declaratory judgment and injunction to require certain of the Companys claims to proceed in court, rather than in the arbitration. In April 2010, the Company filed an answer to that complaint and asserted
certain counterclaims, including a claim against the new owners of the Rochester Brewery for interference with contract. The court denied the new and previous owners motion for a preliminary injunction in June 2010. A hearing in the
arbitration was held in October 2010. In January 2011, the arbitrator issued an award of approximately $1.3 million in damages and expenses to be paid by High Falls Brewery Company, LLC to the Company, although the likelihood of collection of such
award is in doubt. In August 2011, the district court granted the previous owners motion to dismiss the interference claim, and in June 2012 the court denied a motion to amend that claim. The Company filed an appeal of those rulings in
September 2012, which is pending.

The Company is currently not a party to any pending or threatened litigation, the outcome of which would be
expected to have a material adverse effect on its financial condition or the results of its operations.

Environmental Matters

During the second quarter of 2010, the Company entered into an agreement with the City of Cincinnati (the City) to
complete a remediation in accordance with a remediation plan on environmentally contaminated land to be purchased by the City which is adjacent to Company-owned land at the Cincinnati Brewery (the Property). In the third quarter of
2010, the City was awarded a Clean Ohio Revitalization Fund grant (CORF Grant) for the Property and will use these funds to complete the purchase of the Property and will provide funds to the Company to remediate the contaminated land
and demolish certain other buildings on adjacent parcels. The Company paid approximately $0.3 million to the City for an option to purchase the Property after it has been fully remediated to enable potential future expansion at the Cincinnati
Brewery, which is included in property, plant and equipment, net, in the accompanying consolidated balance sheet. In connection with these agreements, the Company recorded a current liability and an equal and offsetting other asset of
approximately $2.6 million for the estimated total cleanup costs for which it is responsible under the remediation plan and the related CORF Grant, respectively. Under the terms of the agreement, the Company would not be reimbursed by the City
for any remediation cost above the currently estimated cleanup cost of approximately $2.6 million.

During the second quarter of 2012, the Company entered into a second agreement with the City to
complete a remediation in accordance with a remediation plan on environmentally contaminated land purchased by the Company which is also adjacent to Company-owned land at the Cincinnati Brewery (the Second Property). The City was awarded
a Clean Ohio Revitalization Fund grant (CORF II Grant) and will provide funds to the Company to offset a portion of the purchase price of the Second Property, clean-up the contaminated land and buildings and to then demolish the
buildings located on the Second Property. The Company paid approximately $263,000 to purchase the Second Property, which is included in property, plant and equipment, net, in the accompanying consolidated balance sheet. In connection with
these arrangements, the Company recorded a current liability and an equal and offsetting other asset of approximately $663,000 for the estimated total acquisition and cleanup costs for which it is responsible under the remediation plan and the
related CORF II Grant, respectively. Under the terms of the agreement with the City, the Company would not be reimbursed by the City for any remediation cost above the currently estimated acquisition and cleanup costs of approximately $663,000.

The Company accrues for environmental remediation-related activities for which commitments or cleanup plans have been developed and for which
costs can be reasonably estimated. All accrued amounts are generally determined in coordination with third-party experts on an undiscounted basis. In light of existing reserves, any additional remediation costs above the currently
estimated cost of $3.2 million will not, in the opinion of management, have a material adverse effect on the Companys consolidated financial position or results of operations.

K.

Product Recall

On April 7, 2008, the Company announced a voluntary product recall of certain glass bottles of its Samuel
Adams® products. The recall was a precautionary step and resulted from routine quality control inspections at
the Cincinnati Brewery, which detected glass inclusions in certain bottles of beer. The bottles were from a single glass plant that supplied bottles to the Company. The glass plant in question supplied approximately 25% of the Companys glass
bottles during the first quarter of 2008. The recall process was substantially completed during the fourth quarter of 2008.

The following
table summarizes the Companys reserves and excise tax credit due upon the destruction of the returned beer and related activities for the 2008 product recall (in thousands):

During the second quarter of 2011, the Company and its former glass bottle supplier entered into an agreement to settle
all claims regarding the recall. The Company received a cash payment of $20.5 million, which was recorded as an offset to operating expenses, and all parties have released each other of any claims as they relate to this matter. In addition, the
Company reversed approximately $0.6 million in reserves against invoices due to the supplier, which was recorded as an offset to cost of goods sold.

L.

Fair Value Measures

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon
the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements).



Level 1  Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement date.



Level 2  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.



Level 3  Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for
the asset or liability at the measurement date.

All financial assets or liabilities that are measured at fair value on a
recurring basis (at least annually) have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The assets or liabilities measured at fair
value on a recurring basis are summarized in the table below (in thousands):

The Companys cash equivalents listed above represent money market mutual fund securities and are
classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments.

The Companys cash surrender value  life insurance represents the cash value of a life insurance policy held by Northwestern Mutual, an A
rated insurance company and is classified within Level 2 of the fair value hierarchy. Northwestern Mutual provides the value of this policy to the Company on a regular basis and the Company adjusts its book value.

Cash, certificates of deposit, receivables and payables are carried at their cost, which approximates fair value, because of their short-term nature.
Financial instruments not recorded at fair value in the consolidated financial statements are summarized in the table below (in thousands):

As of December 29, 2012

Level 1

Level 2

Level 3

Total

Bank Borrowings

$



$

628

$



$

628

The Company evaluates its long-lived assets for impairment when events indicate that an asset or asset group may have
suffered impairment. In the past, the Company has recognized impairments of certain land included in property, plant and equipment. The Company has relied on the work of a licensed real estate appraiser to determine the fair value of the land. The
appraiser used comparisons to historical transactions for similar properties and similar properties available for sale to assist in determining the lands value. The Company has not recorded an impairment charge on its long-lived asset in
fiscal 2012. The last adjustment to record an asset impairment was in the fourth quarter of 2011.

The Company evaluates the recoverability of
goodwill and indefinite-lived intangible assets in the third quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that goodwill or indefinite-lived intangible assets may be impaired. As of December 29,
2012, no such events or changes in circumstances occurred that would have triggered the need for a further impairment review.

M.

Brewery Acquisition

On January 4, 2012, A&S acquired substantially all of the assets of Southern California Brewing Company, Inc., d/b/a Angel
City Brewing Company (Angel City) for a preliminary aggregate purchase price of $1.9 million, which includes a payment of $150,000 made in June 2012 and a payment of $200,000 to be made in March 2013. The remaining purchase price payment
may be reduced by any obligations satisfied by A&S subsequent to the acquisition, but incurred by Angel City prior to the acquisition date. Costs related to the acquisition of Angel City were not significant and were expensed as incurred.

The allocation of the purchase price is preliminary and is based on managements judgment after
evaluating several factors, including preliminary valuation assessments of tangible and intangible assets. The final allocation of the purchase price is as follows (in thousands):

Property, plant and equipment

$

338

Trade name

401

Goodwill

1,161

Total assets acquired

1,900

Less:

Remaining purchase price payment

200

Cash paid

$

1,700

The Company has assigned an indefinite life to the acquired trade name and the related value is included in other assets
in the accompanying consolidated balance sheets. Goodwill resulting from this acquisition is expected to be amortizable for tax purposes. The operating results of Angel City since the acquisition date are included in the Companys consolidated
financial statements.

In connection with the acquisition, A&S entered into a personal services agreement with Angel Citys founder,
pursuant to which he will advise A&S, if requested, on Angel City matters for a period of two years. Also in connection with the acquisition, A&S entered into a lease for the Angel City brewery premises located in Los Angeles, California,
from which it intends to brew, distribute and sell beers under the Angel City brand name for on and off premise consumption . Minimum payments under the personal services agreement and the lease total approximately $1.7 million as of
December 29, 2012, are payable through December 31, 2017 and are expensed as incurred.

N.

Common Stock and Share-Based Compensation

Class A Common Stock

The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the
Class A Common Stock is required for (a) certain future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) certain alterations of rights or terms of the Class A or
Class B Common Stock as set forth in the Articles of Organization of the Company, (c) other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and
(e) sales or dispositions of any significant portion of the Companys assets.

Class B Common Stock

The Class B Common Stock has full voting rights, including the right to (1) elect a majority of the members of the Companys Board of Directors
and (2) approve all (a) amendments to the Companys Articles of Organization, (b) mergers or consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Companys
assets, and (d) equity-based and other executive compensation and other significant corporate matters. The Companys Class B Common Stock is not listed for trading. Each share of Class B Common Stock is freely convertible into one share of
Class A Common Stock, upon request of any Class B holder, and participates equally in earnings.

All distributions with respect to the Companys capital stock are restricted by the Companys
credit agreement, with the exception of distributions of capital stock from subsidiaries to The Boston Beer Company, Inc. and Boston Beer Corporation, repurchase from former employees of non-vested investment shares of Class A Common Stock
issued under the Companys equity incentive plan, redemption of certain shares of Class A Common Stock as approved by the Board of Directors and payment of cash dividends to its holders of common stock.

Employee Stock Compensation Plan

The Companys Employee Equity Incentive Plan (the Equity Plan) currently provides for the grant of discretionary options and restricted
stock awards to employees, and provides for shares to be sold to employees of the Company at a discounted purchase price under its investment share program. The Equity Plan is administered by the Board of Directors of the Company, based on
recommendations received from the Compensation Committee of the Board of Directors. The Compensation Committee consists of three independent directors. In determining the quantities and types of awards for grant, the Compensation Committee
periodically reviews the objectives of the Companys compensation system and takes into account the position and responsibilities of the employee being considered, the nature and value to the Company of his or her service and accomplishments,
his or her present and potential contributions to the success of the Company, the value of the type of awards to the employee and such other factors as the Compensation Committee deems relevant.

Stock options and related vesting requirements and terms are granted at the Board of Directors discretion, but generally vest ratably over
five-year periods and, with respect to certain options granted to members of senior management, based on the Companys performance. Generally, the maximum contractual term of stock options is ten years, although the Board of Directors may grant
options that exceed the ten-year term. During fiscal 2012, 2011 and 2010, the Company granted options to purchase 42,600, 228,200 and 65,100 shares, respectively, of its Class A Common Stock to employees at market price on the grant dates. Of
the 2012 option grants, 11,100 shares relate to performance-based option grants and 31,500 shares relate to special long-term service based retention stock options. Of the 2011 option grants, 13,200 shares relate to performance-based option grants
and 215,000 shares relate to special long-term service based retention stock options. All 2010 option grants are performance-based options. The number of shares that will vest under the performance-based options depends on the level of performance
targets attained on various dates.

On January 1, 2013, the Company granted options to purchase an aggregate of 40,925 shares of the
Companys Class A Common Stock with a weighted average fair value of $58.83 per share, of which 15,000 shares represented special long-term retention stock options to two key employees. The special long-term retention stock options
are service-based with 60% of the shares vesting on January 1, 2018 and the remaining shares vesting annually in equal tranches over the following four years.

Restricted stock awards are also granted at the Board of Directors discretion. During fiscal 2012, 2011 and 2010, the Company granted 16,375, 17,687 and 33,617 shares, respectively, of restricted
stock awards to certain senior managers and key employees, which vest ratably over service periods of five years.

The Equity Plan also has an
investment share program which permits employees who have been with the Company for at least one year to purchase shares of Class A Common Stock at a discount from current market value of 0% to 40%, based on the employees tenure with the
Company. Investment shares vest ratably over service periods of five years. Participants may pay for these shares either up front or through payroll deductions over an eleven-month period during the year of purchase. During fiscal 2012, 2011 and
2010, employees elected to purchase an aggregate of 13,360, 12,985 and 20,392 investment shares, respectively.

On January 1, 2013, the Company granted 11,530 shares of restricted stock awards to certain senior
managers and key employees and employees elected to purchase 12,894 shares under the investment share program.

The Company has reserved
6.0 million shares of Class A Common Stock for issuance pursuant to the Equity Plan, of which 0.9 million shares were available for grant as of December 29, 2012. Shares reserved for issuance under cancelled employee stock
options and forfeited restricted stock are returned to the reserve under the Equity Plan for future grants or purchases. The Company also purchases unvested investment shares from employees who have left the Company; these shares are also returned
to the reserve under the Equity Plan for future grants or purchases.

Non-Employee Director Options

The Company has a stock option plan for non-employee directors of the Company (the Non-Employee Director Plan), pursuant to which each
non-employee director of the Company is granted an option to purchase shares of the Companys Class A Common Stock upon election or re-election to the Board of Directors. Stock options issued to non-employee directors vest upon grant and
have a maximum contractual term of ten years. In years 2012, 2011 and 2010, the Company granted options to purchase an aggregate of 17,367, 30,000, and 30,000 shares of the Companys Class A Common Stock to non-employee directors,
respectively.

The Company has reserved 550,000 shares of Class A Common Stock for issuance pursuant to the Non-Employee Director Plan,
of which 125,133 shares were available for grant as of December 29, 2012. Cancelled non-employee directors stock options are returned to the reserve under the Non-Employee Director Plan for future grants.

Option Activity

Information
related to stock options under the Equity Plan and the Non-Employee Director Plan is summarized as follows:

Shares

Weighted-AverageExercisePrice

Weighted-AverageRemainingContractual Termin Years

AggregateIntrinsicValue(in
thousands)

Outstanding at December 31, 2011

1,908,664

$

41.78

Granted

59,967

103.61

Forfeited

(4,550

)

95.09

Expired





Exercised

(245,965

)

23.29

Outstanding at December 29, 2012

1,718,116

$

46.44

5.56

$

148,684

Exercisable at December 29, 2012

409,272

$

36.70

4.64

$

39,404

Vested and expected to vest at December 29, 2012

1,551,968

$

46.89

5.51

$

133,610

Of the total options outstanding at December 29, 2012, 381,470 shares were performance-based options.

On January 1, 2008, the Company granted the Chief Executive Officer an option to purchase 753,864 shares of its Class A Common Stock, which
vests over a five-year period, commencing on January 1, 2014, at the rate of 20% per year. The exercise price is determined by multiplying $42.00 by the aggregate change in the DJ Wilshire 5000 Index from and after January 1, 2008
through the close of business on the trading date next preceding each date on which the option is exercised. The exercise price will not be less than $37.65 per share and the excess of the fair value of the Companys Class A Common Stock
cannot exceed $70 per share over the exercise price. The Company is accounting for this award as a market-based award which was valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and
establishes fair value based on the most likely outcome. Under the Monte Carlo Simulation pricing model, the Company calculated the weighted average fair value per share to be $8.41, and recorded stock-based compensation expense of $0.8, $0.8, and
$0.7 million related to this option in the fiscal year 2012, 2011, and 2010, respectively.

In August 2007, the Company granted an option to
purchase 180,000 shares of its Class A Common Stock to its Chief Executive Officer that cliff-vest after completion of a six-year service period. Under the binomial option-pricing model, the weighted average fair value of the option is $19.39
per share, and the Company recorded stock-based compensation expense of $0.6, $0.5, and $0.5 million related to this stock option in the fiscal years 2012, 2011 and 2010, respectively.

Based on information available prior to the issuance of the Companys financial statements for the fiscal year ended December 26, 2009, the Compensation Committee of the Companys Board of
Directors concluded that it was probable that the performance criteria under the option to purchase 120,000 shares granted to the Chief Executive Officer in 2005 would be met. The Company accordingly recorded related
compensation expense of approximately $0.9 million in the fourth quarter of 2009. In late April 2010, the Compensation Committee, based upon updated information available through April 23, 2010, concluded that one of
the three applicable performance criteria had not been met. As a result, the option with respect to these 120,000 shares lapsed and, in the first quarter of 2010, the Company reversed, as a change in estimate, the related
compensation expense of approximately $0.9 million, or $0.04 per dilutive share, for the twelve months ended December 25, 2010.

Stock-Based Compensation

The
following table provides information regarding stock-based compensation expense included in operating expenses in the accompanying consolidated statements of income:

2012

2011(53 weeks)

2010

(in thousands)

Amounts included in advertising, promotional and selling expenses

$

2,452

$

2,236

$

1,116

Amounts included in general and administrative expenses

4,076

3,942

2,008

*

Total stock-based compensation expense

$

6,528

$

6,178

$

3,124

Amounts related to performance-based stock options included in total stock-based compensation expense

$

645

$

973

$

(193

)*

*

Net of a reversal of approximately $872,000 of expense related to a performance-based option to purchase 120,000 shares granted to the Chief Executive Officer in 2005.

As permitted by ASC 718, the Company uses a lattice model, such as the binomial option-pricing model, to estimate the fair
values of stock options. The Company believes that the Black-Scholes option-pricing model is

less effective than the binomial option-pricing model in valuing long-term options, as it assumes that volatility and interest rates are constant over the life of the option. In addition, the
Company believes that the binomial option-pricing model more accurately reflects the fair value of its stock awards, as it takes into account historical employee exercise patterns based on changes in the Companys stock price and other relevant
variables. The weighted-average fair value of stock options granted during 2012, 2011 and 2010 was $45.03, $43.07 and $21.96 per share, respectively, as calculated using a binomial option-pricing model.

Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:

2012

2011

2010

Expected volatility

34.1

%

34.6

%

34.3

%

Risk-free interest rate

1.86

%

3.30

%

3.65

%

Expected dividends

0

%

0

%

0

%

Exercise factor

2.9 times

2.2 times

2.0 times

Discount for post-vesting restrictions

0.8

%

1.1

%

1.7

%

Expected volatility is based on the Companys historical realized volatility. The risk-free interest rate represents
the implied yields available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option when using the binomial model. Expected dividend yield is 0% because the Company has not paid dividends in the past and currently has
no known intention to do so in the future. Exercise factor and discount for post-vesting restrictions are based on the Companys historical experience.

Fair value of restricted stock awards is based on the Companys traded stock price on the date of the grants. Fair value of investment shares is calculated using the binomial option-pricing model.

The Company uses the straight-line attribution method in recognizing stock-based compensation expense for awards that vest based on service
conditions. For awards that vest subject to performance conditions, compensation expense is recognized ratably for each tranche of the award over the performance period if it is probable that performance conditions will be met.

Under ASC 718, compensation expense is recognized less estimated forfeitures. Because most of the Companys equity awards vest
on January 1st each year, the Company recognized
stock-based compensation expense related to those awards, net of actual forfeitures. For equity awards that do not vest on January 1st, the estimated forfeiture rate used was 8.5%. The forfeiture rate was based upon historical experience and the Company
periodically reviews this rate to ensure proper projection of future forfeitures.

The total fair value of options vested during 2012, 2011
and 2010 was $2.0 million, $1.8 million and $1.4 million, respectively. The aggregate intrinsic value of stock options exercised during 2012, 2011 and 2010 was $20.9 million, $11.6 million and $8.5 million, respectively.

Based on equity awards outstanding as of December 29, 2012, there were $13.7 million of
unrecognized compensation costs, net of estimated forfeitures, related to unvested share-based compensation arrangements that are expected to vest. Such costs are expected to be recognized over a weighted-average period of 2.6 years. The following
table summarizes the estimated future annual stock-based compensation expense related to share-based arrangements existing as of December 29, 2012 that are expected to vest (in thousands):

2013

$

4,342

2014

3,404

2015

2,821

2016

1,462

2017

638

Thereafter

1,068

Total

$

13,735

In addition, as of December 29, 2012, there were $0.7 million of unrecognized compensation costs associated with
certain stock options with vesting requirements based on the achievement of various performance targets. Through December 29, 2012, no compensation expense was recognized for these performance-based stock options, nor will any be recognized
until such time when the Company can estimate that it is probable that performance targets will be met.

Non-Vested Shares Activity

The following table summarizes vesting activities of shares issued under the investment share program and restricted stock awards:

Number ofShares

WeightedAverageFairValue

Non-vested at December 31, 2011

141,391

$

37.25

Granted

29,735

81.58

Vested

(49,356

)

34.55

Forfeited

(6,938

)

49.91

Non-vested at December 29, 2012

114,832

$

51.67

Stock Repurchase Program

On October 1, 2012, the Board of Directors of the Company increased the aggregate expenditure limit for the Companys Stock Repurchase Program by $25.0 million, thereby increasing the limit from
$275.0 million to $300.0 million.

As of December 29, 2012, the Company has repurchased a cumulative total of approximately
10.7 million shares of its Class A Common Stock for an aggregate purchase price of approximately $269.9 million as follows:

Number ofShares

AggregatePurchasePrice

(in thousands)

Repurchased at December 26, 2009

8,669,795

$

121,091

2010 repurchases

1,101,708

67,981

Repurchased at December 25, 2010

9,771,503

189,072

2011 repurchases

760,036

62,824

Repurchased at December 31, 2011

10,531,539

251,896

2012 repurchases

165,192

18,046

Repurchased at December 29, 2012

10,696,731

$

269,942

O.

Employee Retirement Plans and Post-Retirement Benefit Plan

The Company has two retirement plans covering substantially all non-union employees, two retirement plans covering substantially all
union employees, and one post-retirement medical plan covering substantially all union employees.

Prior to 2012, the Company participated in
two multi-employer pension plans administrated by organized labor unions. The Companys share of the unfunded benefit obligations, employer contributions and benefit costs were not significant individually or in the aggregate to these plans and
to the Companys financial statements. The Company made aggregate contributions to the two multi-employer plans of $4,000, $43,000 and $35,000 in 2012, 2011 and 2010, respectively. During 2012, the Company withdrew from both multi-employer
retirement plans under agreements whereby the Company will no longer contribute to or participate in those plans. The Company recorded a total estimated withdrawal liability of $140,000 which is included in accrued expenses in the accompanying
consolidated balance sheet as of December 29, 2012.

Non-Union Plans

The Boston Beer Company 401(k) Plan (the Boston Beer 401(k) Plan), which was established by the Company in 1993, is a Company-sponsored
defined contribution plan that covers a majority of the Companys non-union employees who are employed by Boston Beer Corporation, Samuel Adams Brewery Company, Ltd, and A&S Brewing Collaborative LLC. All non-union employees of these
entities over the age of 21 are eligible to participate in the plan on the first day of the first month after commencing employment. Participants may make voluntary contributions up to 60% of their annual compensation, subject to IRS limitations.
After the sixth month of employment, the Company matches each participants contribution. A maximum of 6% of compensation is taken into account in determining the amount of the match. The Company matches 100% of the first $1,000 of the eligible
compensation participants contribute. Thereafter, the Company matches 50% of the eligible contribution. The Companys contributions to the Boston Beer 401(k) Plan amounted to $1.4 million, $1.3 million and $1.1 million in fiscal years 2012,
2011 and 2010, respectively. The Company is responsible for the payment of any fees related to the management of the Boston Beer 401(k) Plan. Such fees are not material to the Company.

The Samuel Adams Pennsylvania Brewery Company 401(k) Plan (the SAPB 401(k) Plan), which was established in 2008, covers a majority of the Companys employees who are employed by Samuel
Adams

Pennsylvania Brewery Company (SAPB). All employees of SAPB over the age of 21 are eligible to participate in the plan thirty days after commencing employment. Participants in the SAPB
401(k) Plan may make voluntary contributions up to 60% of their annual compensation, subject to IRS limitations. Under the SAPB 401(k) Plan, participants receive a Company match equal to 100% of the first 1% of their eligible compensation and 50% of
the next 5% of their eligible compensation that is contributed to the plan. Pursuant to the terms of the Contract of Sale with Diageo North America, Inc. (Diageo), from who the Company purchased SAPB in 2008, the Company recognized all
service of those Diageo employees who were subsequently hired by the Company for eligibility and vesting. The Companys contribution to the SAPB 401(k) Plan amounted to $0.5 million, $0.5 million and $0.4 million in fiscal years 2012, 2011 and
2010, respectively. The Company is responsible for the payment of any fees related to the management of the SAPB 401(k) Plan. Such fees are not material to the Company. Effective January 1, 2013, the SAPB 401(k) Plan merged with and into the
Boston Beer 401(k) Plan.

Union Plans

The Company has one defined contribution plan, one defined benefit plan and one post-retirement medical plan, which combined cover substantially all union employees who are employed by Samuel Adams
Brewery Company, Ltd.

The defined contribution plan, the Samuel Adams Brewery Company, Ltd. 401(k) Plan for Represented Employees (the
SABC 401(k) Plan), is a Company sponsored plan. It was established in 1997 and is available to all union employees upon completion of one hour of full-time employment. Participants may make voluntary contributions up to 60% of their
annual compensation to the SABC 401(k) Plan, subject to IRS limitations. Effective April 1, 2007, the Company makes a non-elective contribution for certain bargaining employees who are members of a specific union. Effective November, 2011, the
Company expanded the non-elective contribution for additional union members. Company contributions were insignificant. The Company also incurs insignificant administration costs for the plan.

The defined benefit plan is a Company-sponsored pension plan, The Local Union #1199 Defined Benefit Pension Plan (the Local 1199 Pension Plan). It was established in 1991 and is eligible to
all union employees who are covered by the Companys collective bargaining agreement and have completed twelve consecutive months of employment with at least 750 hours worked. The defined benefit is determined based on years of service since
July 1991. The Company made combined contributions of $151,000, $542,000 and $105,000 to this plan in fiscal 2012, 2011 and 2010, respectively. At December 29, 2012 and December 31, 2011, the unfunded projected pension benefits were not
material to the Companys financial statements.

A comprehensive medical plan is offered to union employees who have voluntarily retired
at the age of 65 or have become permanently disabled (the Retiree Medical Plan). Employees must have worked for the Company or the prior owners for at least 20 years at the Companys Cincinnati Brewery, been enrolled in the
Companys medical insurance plan for 5 consecutive years prior to retirement and be eligible for Medicare benefits under the Social Security Act. Eligible retirees pay 100% of the cost of the coverage. In addition, the Company provides a
supplement to eligible retirees from the Local Union #1199 and the local Union #20 to assist them with the cost of Medicare gap coverage. The accumulated post-retirement benefit obligation was determined using a discount rate of 4.0% at
December 29, 2012, 4.5% at December 31, 2011 and 5.5% at December 31, 2010, and a 2.5% increase in the Cincinnati Consumer Price Index for the years then ended. The effect of a 1% point increase and the effect of a 1% point decrease
in the assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic postretirement health care benefit costs and the accumulated post-retirement benefit obligation for health care benefits would
not be significant.

The funded status of the Companys principal defined benefit pension plan and post-retirement
medical benefit plan are as follows:

Local 1199 Pension Plan

Retiree Medical Plan

December 29,2012

December 31,2011

December 29,2012

December 31,2011

(in thousands)

Fair value of plan assets at end of fiscal year

$

2,026

$

1,710

$



$



Benefit obligation at end of fiscal year

3,095

2,598

549

482

Unfunded Status

$

(1,069

)

$

(888

)

$

(549

)

$

(482

)

The Local 1199 Plan invests in a family of funds that are designed to minimize excessive short-term risk and focus on
consistent, competitive long-term performance, consistent with the funds investment objectives. The fund-specific objectives vary and include maximizing long-term returns both before and after taxes, maximizing total return from capital
appreciation plus income and funds that invest in common stock of companies that cover a broad range of industries. The fair value of the plan assets was determined by reference to period end quoted market prices.

The basis of the long-term rate of return assumption of 7% reflects the Local 1199 Plans current targeted asset mix of approximately 35% debt
securities and 65% equity securities with assumed average annual returns of approximately 4% to 6% for debt securities and 8% to 12% for equity securities. It is assumed that the Local 1199 Plans investment portfolio will be adjusted
periodically to maintain the targeted ratios of debt securities and equity securities. Additional consideration is given to the plans historical returns as well as future long-range projections of investment returns for each asset
category. The assumed discount rate in estimating the pension obligation was 4.0% in 2012, 4.5% in 2011, and 5.5% in 2010.

The Local 1199
Plans weighted-average asset allocations at the measurement dates by asset category are as follows:

The following table sets forth the computation of basic net income per share using the two-class method:

December 29,2012(52
weeks)

December 31,2011(53
weeks)

December 25,2010(52
weeks)

(in thousands, except per share data)

Net income

$

59,467

$

66,059

$

50,142

Allocation of net income for basic:

Class A Common Stock

$

40,009

$

45,209

$

35,066

Class B Common Stock

18,913

20,850

15,076

Unvested participating shares

545





$

59,467

$

66,059

$

50,142

Weighted average number of shares for basic:

Class A Common Stock

8,689

8,905

9,553

Class B Common Stock

4,107

4,107

4,107

Unvested participating shares

118





12,914

13,012

13,660

Net income per share for basic:

Class A Common Stock

$

4.60

$

5.08

$

3.67

Class B Common Stock

$

4.60

$

5.08

$

3.67

Net Income per Common Share  Diluted

The Company calculates diluted net income per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the two-class method, which assumes the participating
securities are not exercised or converted.

The following tables set forth the computation of diluted net income per share, assuming the
conversion of all Class B Common Stock into Class A Common Stock and using the two-class method for unvested participating shares:

Basic net income per common share for each share of Class A Common Stock and Class B Common Stock is $4.61, $5.08
and $3.67 for the fiscal years 2012, 2011 and 2010, respectively, as each share of Class A and Class B participates equally in earnings. Shares of Class B are convertible at any time into shares of Class A on a one-for-one basis at the
option of the stockholder.

Weighted average stock options to purchase 271,000, 213,000 and 17,600 shares of Class A Common Stock were
outstanding during fiscal 2012, 2011 and 2010, respectively, but not included in computing diluted income per share because their effects were anti-dilutive. Additionally, performance-based stock options to purchase 60,000, 65,000 and 100,000 shares
of Class A Common Stock were outstanding during fiscal 2012, 2011 and 2010, respectively, but not included in computing dilutive income per share because the performance criteria of these stock options were not expected to be met as of
December 29, 2012, December 31, 2011 and December 25, 2010, respectively. Furthermore, performance-based stock options to purchase 4,550 and 219,700 shares of Class A Common Stock were not included in computing diluted
income per share because the performance criteria of these stock options were not met and the options were cancelled during the twelve months ended December 29, 2012 and December 31, 2011, respectively.

The Company maintains reserves against accounts receivable for doubtful accounts and inventory for obsolete and slow-moving inventory.
The Company also maintains reserves against accounts receivable for distributor promotional allowances. In addition, the Company maintains a reserve for estimated returns of stale beer, which is included in accrued expenses.